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

— Warren Buffett

One of the most important things investors can learn from Warren Buffett, is about how they approach their time horizon for an investment into a stock under consideration. Because immediately after buying shares of a given stock, investors will then be able to check on the day-to-day (and even minute-by-minute) market value. Some days the stock market will be up, other days down. These daily fluctuations can often distract from the long-term view. Today, we look at the result of a twenty year holding period for an investor who was considering General Mills Inc (NYSE: GIS) back in 2002, bought the stock, ignored the market’s ups and downs, and simply held through to today.

Start date: 01/07/2002


End date: 01/06/2022
Start price/share: $24.68
End price/share: $68.49
Starting shares: 405.19
Ending shares: 739.80
Dividends reinvested/share: $25.33
Total return: 406.69%
Average annual return: 8.45%
Starting investment: $10,000.00
Ending investment: $50,696.41

The above analysis shows the twenty year investment result worked out well, with an annualized rate of return of 8.45%. This would have turned a $10K investment made 20 years ago into $50,696.41 today (as of 01/06/2022). On a total return basis, that’s a result of 406.69% (something to think about: how might GIS shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that General Mills Inc paid investors a total of $25.33/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 2.04/share, we calculate that GIS has a current yield of approximately 2.98%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.04 against the original $24.68/share purchase price. This works out to a yield on cost of 12.07%.

Another great investment quote to think about:
“You make most of your money in a bear market, you just don’t realize it at the time.” — Shelby Davis