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“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 DuPont (NYSE: DD)? Today, we examine the outcome of a two-decade investment into the stock back in 2002.

Start date: 10/10/2002


End date: 10/07/2022
Start price/share: $50.54
End price/share: $52.36
Starting shares: 197.86
Ending shares: 373.45
Dividends reinvested/share: $50.21
Total return: 95.54%
Average annual return: 3.41%
Starting investment: $10,000.00
Ending investment: $19,558.28

As shown above, the two-decade investment result worked out as follows, with an annualized rate of return of 3.41%. This would have turned a $10K investment made 20 years ago into $19,558.28 today (as of 10/07/2022). On a total return basis, that’s a result of 95.54% (something to think about: how might DD shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that DuPont paid investors a total of $50.21/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 1.32/share, we calculate that DD has a current yield of approximately 2.52%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.32 against the original $50.54/share purchase price. This works out to a yield on cost of 4.99%.

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