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“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”

— Warren Buffett

The Warren Buffett investment philosophy calls for a long-term investment horizon, where a two-decade holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Procter & Gamble Company (NYSE: PG)? Today, we examine the outcome of a two-decade investment into the stock back in 2000.

Start date: 06/19/2000


End date: 06/16/2020
Start price/share: $28.05
End price/share: $118.13
Starting shares: 356.51
Ending shares: 612.58
Dividends reinvested/share: $37.42
Total return: 623.64%
Average annual return: 10.40%
Starting investment: $10,000.00
Ending investment: $72,379.72

The above analysis shows the two-decade investment result worked out quite well, with an annualized rate of return of 10.40%. This would have turned a $10K investment made 20 years ago into $72,379.72 today (as of 06/16/2020). On a total return basis, that’s a result of 623.64% (something to think about: how might PG shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Procter & Gamble Company paid investors a total of $37.42/share in dividends over the 20 holding period, marking a second component of the total return beyond share price change alone. Much like watering a tree, reinvesting dividends can help an investment to grow over time — for the above calculations we assume dividend reinvestment (and for this exercise the closing price on ex-date is used for the reinvestment of a given dividend).

Based upon the most recent annualized dividend rate of 3.1628/share, we calculate that PG has a current yield of approximately 2.68%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 3.1628 against the original $28.05/share purchase price. This works out to a yield on cost of 9.55%.

One more investment quote to leave you with:
“You make most of your money in a bear market, you just don’t realize it at the time.” — Shelby Davis