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

— Warren Buffett

Investors can learn a lot from Warren Buffett, whose above quote teaches the importance of thinking about investment time horizon, and asking ourselves before buying any given stock: can we envision holding onto it for years — even a two-decade holding period possibly?

Suppose a “buy-and-hold” investor was considering an investment into JPMorgan Chase & Co (NYSE: JPM) back in 2003: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full two-decade investment time horizon and then actually held for these past 20 years, here’s how that investment would have turned out.

Start date: 03/10/2003


End date: 03/07/2023
Start price/share: $21.44
End price/share: $138.62
Starting shares: 466.42
Ending shares: 816.42
Dividends reinvested/share: $37.30
Total return: 1,031.72%
Average annual return: 12.89%
Starting investment: $10,000.00
Ending investment: $113,083.17

As shown above, the two-decade investment result worked out quite well, with an annualized rate of return of 12.89%. This would have turned a $10K investment made 20 years ago into $113,083.17 today (as of 03/07/2023). On a total return basis, that’s a result of 1,031.72% (something to think about: how might JPM shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that JPMorgan Chase & Co paid investors a total of $37.30/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/share, we calculate that JPM has a current yield of approximately 2.89%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 4 against the original $21.44/share purchase price. This works out to a yield on cost of 13.48%.

Another great investment quote to think about:
“You don’t need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ.” — Warren Buffett