“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
— Warren Buffett
The above quote from Warren Buffett is timeless, and brings into focus the choice about time horizon that any investor should think about before buying a stock they are considering. Behind every stock is an actual business; what will that business look like over a two-decade period?
Today, let’s look backwards in time to 2000, and take a look at what happened to investors who asked that very question about DaVita Inc (NYSE: DVA), by taking a look at the investment outcome over a two-decade holding period.
| Start date: | 09/18/2000 |
|
|||
| End date: | 09/15/2020 | ||||
| Start price/share: | $2.27 | ||||
| End price/share: | $89.84 | ||||
| Starting shares: | 4,405.29 | ||||
| Ending shares: | 4,405.29 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 3,857.71% | ||||
| Average annual return: | 20.19% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $396,099.54 | ||||
The above analysis shows the two-decade investment result worked out exceptionally well, with an annualized rate of return of 20.19%. This would have turned a $10K investment made 20 years ago into $396,099.54 today (as of 09/15/2020). On a total return basis, that’s a result of 3,857.71% (something to think about: how might DVA shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
One more piece of investment wisdom to leave you with:
“Cash is a fact, profit is an opinion.” — Alfred Rappaport
