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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 Sherwin-Williams Co (NYSE: SHW)? Today, we examine the outcome of a two-decade investment into the stock back in 2000.

Start date: 10/02/2000


End date: 09/29/2020
Start price/share: $20.69
End price/share: $705.67
Starting shares: 483.38
Ending shares: 670.73
Dividends reinvested/share: $38.59
Total return: 4,633.11%
Average annual return: 21.26%
Starting investment: $10,000.00
Ending investment: $472,944.31

The above analysis shows the two-decade investment result worked out exceptionally well, with an annualized rate of return of 21.26%. This would have turned a $10K investment made 20 years ago into $472,944.31 today (as of 09/29/2020). On a total return basis, that’s a result of 4,633.11% (something to think about: how might SHW shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Sherwin-Williams Co paid investors a total of $38.59/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 5.36/share, we calculate that SHW has a current yield of approximately 0.76%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 5.36 against the original $20.69/share purchase price. This works out to a yield on cost of 3.67%.

More investment wisdom to ponder:
“As long as you enjoy investing, you’ll be willing to do the homework and stay in the game.” — Jim Cramer