“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 twenty year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Autodesk Inc (NASD: ADSK)? Today, we examine the outcome of a twenty year investment into the stock back in 2000.
| Start date: | 06/09/2000 |
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| End date: | 06/08/2020 | ||||
| Start price/share: | $9.16 | ||||
| End price/share: | $233.51 | ||||
| Starting shares: | 1,091.70 | ||||
| Ending shares: | 1,127.02 | ||||
| Dividends reinvested/share: | $0.30 | ||||
| Total return: | 2,531.70% | ||||
| Average annual return: | 17.75% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $263,024.36 | ||||
As we can see, the twenty year investment result worked out exceptionally well, with an annualized rate of return of 17.75%. This would have turned a $10K investment made 20 years ago into $263,024.36 today (as of 06/08/2020). On a total return basis, that’s a result of 2,531.70% (something to think about: how might ADSK shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Autodesk Inc paid investors a total of $0.30/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 .015/share, we calculate that ADSK has a current yield of approximately 0.00%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .015 against the original $9.16/share purchase price. This works out to a yield on cost of 0.00%.
Here’s one more great investment quote before you go:
“Sentimentality about an investments leads to lack of discipline.” — Sam Zell
