“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— Warren Buffett
Investors can learn a lot from Warren Buffett, whose above quote teaches the importance of thinking about investment time horizon, and asking ourselves before buying any given stock: can we envision holding onto it for years — even a twenty year holding period possibly?
Suppose a “buy-and-hold” investor was considering an investment into Dollar Tree Inc (NASD: DLTR) back in 2002: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full twenty year investment time horizon and then actually held for these past 20 years, here’s how that investment would have turned out.
| Start date: | 05/28/2002 |
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| End date: | 05/26/2022 | ||||
| Start price/share: | $12.46 | ||||
| End price/share: | $162.80 | ||||
| Starting shares: | 802.57 | ||||
| Ending shares: | 802.57 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 1,206.58% | ||||
| Average annual return: | 13.71% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $130,747.02 | ||||
The above analysis shows the twenty year investment result worked out quite well, with an annualized rate of return of 13.71%. This would have turned a $10K investment made 20 years ago into $130,747.02 today (as of 05/26/2022). On a total return basis, that’s a result of 1,206.58% (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.]
More investment wisdom to ponder:
“In investing, what is comfortable is rarely profitable.” — Robert Arnott
