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“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 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 Mondelez International Inc (NASD: MDLZ)? Today, we examine the outcome of a twenty year investment into the stock back in 2001.

Start date: 10/12/2001


End date: 10/11/2021
Start price/share: $33.40
End price/share: $59.42
Starting shares: 299.40
Ending shares: 741.71
Dividends reinvested/share: $32.15
Total return: 340.72%
Average annual return: 7.69%
Starting investment: $10,000.00
Ending investment: $44,041.30

The above analysis shows the twenty year investment result worked out well, with an annualized rate of return of 7.69%. This would have turned a $10K investment made 20 years ago into $44,041.30 today (as of 10/11/2021). On a total return basis, that’s a result of 340.72% (something to think about: how might MDLZ shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Mondelez International Inc paid investors a total of $32.15/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 1.4/share, we calculate that MDLZ has a current yield of approximately 2.36%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.4 against the original $33.40/share purchase price. This works out to a yield on cost of 7.07%.

Here’s one more great investment quote before you go:
“Those who do not remember the past are condemned to repeat it.” — George Santayana