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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 twenty year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Texas Instruments Inc. (NASD: TXN)? Today, we examine the outcome of a twenty year investment into the stock back in 2002.

Start date: 12/02/2002


End date: 12/01/2022
Start price/share: $19.77
End price/share: $177.50
Starting shares: 505.82
Ending shares: 747.97
Dividends reinvested/share: $29.27
Total return: 1,227.64%
Average annual return: 13.80%
Starting investment: $10,000.00
Ending investment: $132,880.27

As shown above, the twenty year investment result worked out quite well, with an annualized rate of return of 13.80%. This would have turned a $10K investment made 20 years ago into $132,880.27 today (as of 12/01/2022). On a total return basis, that’s a result of 1,227.64% (something to think about: how might TXN shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Texas Instruments Inc. paid investors a total of $29.27/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 4.96/share, we calculate that TXN has a current yield of approximately 2.79%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 4.96 against the original $19.77/share purchase price. This works out to a yield on cost of 14.11%.

Here’s one more great investment quote before you go:
“Though tempting, trying to time the market is a loser’s game.” — Christopher Davis