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“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 twenty year 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 Anthem Inc (NYSE: ANTM), by taking a look at the investment outcome over a twenty year holding period.

Start date: 06/06/2002


End date: 06/03/2022
Start price/share: $70.45
End price/share: $493.26
Starting shares: 141.94
Ending shares: 204.36
Dividends reinvested/share: $52.37
Total return: 908.03%
Average annual return: 12.24%
Starting investment: $10,000.00
Ending investment: $100,746.03

The above analysis shows the twenty year investment result worked out quite well, with an annualized rate of return of 12.24%. This would have turned a $10K investment made 20 years ago into $100,746.03 today (as of 06/03/2022). On a total return basis, that’s a result of 908.03% (something to think about: how might ANTM shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Anthem Inc paid investors a total of $52.37/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 5.12/share, we calculate that ANTM has a current yield of approximately 1.04%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 5.12 against the original $70.45/share purchase price. This works out to a yield on cost of 1.48%.

Here’s one more great investment quote before you go:
“Everyone has the brainpower to make money in stocks. Not everyone has the stomach. If you are susceptible to selling everything in a panic, you ought to avoid stocks and mutual funds altogether.” — Peter Lynch