Photo credit:

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

— Warren Buffett

The Warren Buffett investment philosophy calls for a long-term investment horizon, where a two-decade holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into PPL Corp (NYSE: PPL)? Today, we examine the outcome of a two-decade investment into the stock back in 2002.

Start date: 08/12/2002


End date: 08/11/2022
Start price/share: $16.19
End price/share: $29.43
Starting shares: 617.67
Ending shares: 1,513.96
Dividends reinvested/share: $25.96
Total return: 345.56%
Average annual return: 7.75%
Starting investment: $10,000.00
Ending investment: $44,534.94

As we can see, the two-decade investment result worked out well, with an annualized rate of return of 7.75%. This would have turned a $10K investment made 20 years ago into $44,534.94 today (as of 08/11/2022). On a total return basis, that’s a result of 345.56% (something to think about: how might PPL shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that PPL Corp paid investors a total of $25.96/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 .9/share, we calculate that PPL has a current yield of approximately 3.06%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .9 against the original $16.19/share purchase price. This works out to a yield on cost of 18.90%.

One more piece of investment wisdom to leave you with:
“Investors should purchase stocks like they purchase groceries, not like they purchase perfume.” — Benjamin Graham