Photo credit:

“Someone’s sitting in the shade today because someone planted a tree a long time ago.”

— 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 Qualcomm Inc (NASD: QCOM)? Today, we examine the outcome of a two-decade investment into the stock back in 2000.

Start date: 12/14/2000


End date: 12/11/2020
Start price/share: $44.03
End price/share: $144.28
Starting shares: 227.12
Ending shares: 328.82
Dividends reinvested/share: $22.07
Total return: 374.42%
Average annual return: 8.09%
Starting investment: $10,000.00
Ending investment: $47,412.78

The above analysis shows the two-decade investment result worked out well, with an annualized rate of return of 8.09%. This would have turned a $10K investment made 20 years ago into $47,412.78 today (as of 12/11/2020). On a total return basis, that’s a result of 374.42% (something to think about: how might QCOM shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Qualcomm Inc paid investors a total of $22.07/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 2.6/share, we calculate that QCOM has a current yield of approximately 1.80%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.6 against the original $44.03/share purchase price. This works out to a yield on cost of 4.09%.

Another great investment quote to think about:
“Searching for companies is like looking for grubs under rocks: if you turn over 10 rocks you’ll likely find one grub; if you turn over 20 rocks you’ll find two.” — Peter Lynch