“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
— 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 two-decade period?
Today, let’s look backwards in time to 2002, 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 two-decade holding period.
| Start date: | 02/25/2002 |
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| End date: | 02/24/2022 | ||||
| Start price/share: | $10.20 | ||||
| End price/share: | $136.13 | ||||
| Starting shares: | 980.39 | ||||
| Ending shares: | 980.39 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 1,234.61% | ||||
| Average annual return: | 13.82% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $133,348.37 | ||||
As we can see, the two-decade investment result worked out quite well, with an annualized rate of return of 13.82%. This would have turned a $10K investment made 20 years ago into $133,348.37 today (as of 02/24/2022). On a total return basis, that’s a result of 1,234.61% (something to think about: how might DLTR shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Here’s one more great investment quote before you go:
“You make most of your money in a bear market, you just don’t realize it at the time.” — Shelby Davis
