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“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”

— 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 Weyerhaeuser Co (NYSE: WY), by taking a look at the investment outcome over a twenty year holding period.

Start date: 08/16/2002


End date: 08/15/2022
Start price/share: $54.56
End price/share: $36.95
Starting shares: 183.28
Ending shares: 936.72
Dividends reinvested/share: $52.59
Total return: 246.12%
Average annual return: 6.40%
Starting investment: $10,000.00
Ending investment: $34,604.12

The above analysis shows the twenty year investment result worked out well, with an annualized rate of return of 6.40%. This would have turned a $10K investment made 20 years ago into $34,604.12 today (as of 08/15/2022). On a total return basis, that’s a result of 246.12% (something to think about: how might WY shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Weyerhaeuser Co paid investors a total of $52.59/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 .72/share, we calculate that WY has a current yield of approximately 1.95%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .72 against the original $54.56/share purchase price. This works out to a yield on cost of 3.57%.

Another great investment quote to think about:
“If I’ve learned one thing in this life it’s this: even if you lose, don’t lose the lesson.” — Daymond John