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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 two-decade holding period for an investor who was considering Activision Blizzard, Inc. (NASD: ATVI) back in 2002, bought the stock, ignored the market’s ups and downs, and simply held through to today.

Start date: 04/22/2002


End date: 04/19/2022
Start price/share: $3.87
End price/share: $79.03
Starting shares: 2,583.98
Ending shares: 2,914.21
Dividends reinvested/share: $3.74
Total return: 2,203.10%
Average annual return: 16.98%
Starting investment: $10,000.00
Ending investment: $230,465.31

As we can see, the two-decade investment result worked out exceptionally well, with an annualized rate of return of 16.98%. This would have turned a $10K investment made 20 years ago into $230,465.31 today (as of 04/19/2022). On a total return basis, that’s a result of 2,203.10% (something to think about: how might ATVI shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Activision Blizzard, Inc. paid investors a total of $3.74/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 .47/share, we calculate that ATVI has a current yield of approximately 0.59%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .47 against the original $3.87/share purchase price. This works out to a yield on cost of 15.25%.

More investment wisdom to ponder:
“Far more money has been lost by investors trying to anticipate corrections, than lost in the corrections themselves.” — Peter Lynch