“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— 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 decade-long period?
Today, let’s look backwards in time to 2011, and take a look at what happened to investors who asked that very question about Dollar Tree Inc (NASD: DLTR), by taking a look at the investment outcome over a decade-long holding period.
| Start date: | 11/25/2011 |
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| End date: | 11/23/2021 | ||||
| Start price/share: | $38.31 | ||||
| End price/share: | $144.71 | ||||
| Starting shares: | 261.03 | ||||
| Ending shares: | 261.03 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 277.73% | ||||
| Average annual return: | 14.21% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $37,774.56 | ||||
The above analysis shows the decade-long investment result worked out quite well, with an annualized rate of return of 14.21%. This would have turned a $10K investment made 10 years ago into $37,774.56 today (as of 11/23/2021). On a total return basis, that’s a result of 277.73% (something to think about: how might DLTR shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
More investment wisdom to ponder:
“Sometimes buying early on the way down looks like being wrong, but it isn’t.” — Seth Klarman
