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

— 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 twenty year period?

Today, let’s look backwards in time to 2001, and take a look at what happened to investors who asked that very question about Globe Life Inc (NYSE: GL), by taking a look at the investment outcome over a twenty year holding period.

Start date: 09/17/2001


End date: 09/16/2021
Start price/share: $38.20
End price/share: $91.85
Starting shares: 261.78
Ending shares: 316.55
Dividends reinvested/share: $11.20
Total return: 190.75%
Average annual return: 5.48%
Starting investment: $10,000.00
Ending investment: $29,084.15

The above analysis shows the twenty year investment result worked out well, with an annualized rate of return of 5.48%. This would have turned a $10K investment made 20 years ago into $29,084.15 today (as of 09/16/2021). On a total return basis, that’s a result of 190.75% (something to think about: how might GL shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Globe Life Inc paid investors a total of $11.20/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 .79/share, we calculate that GL has a current yield of approximately 0.86%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .79 against the original $38.20/share purchase price. This works out to a yield on cost of 2.25%.

One more piece of investment wisdom to leave you with:
“All the opportunity in the world means nothing if you don’t actually pull the trigger.” — Sam Zell