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“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


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