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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 Constellation Brands Inc (NYSE: STZ)? Today, we examine the outcome of a two-decade investment into the stock back in 2003.

Start date: 07/07/2003


End date: 07/03/2023
Start price/share: $14.64
End price/share: $247.47
Starting shares: 683.06
Ending shares: 760.19
Dividends reinvested/share: $21.01
Total return: 1,781.25%
Average annual return: 15.80%
Starting investment: $10,000.00
Ending investment: $188,081.35

As shown above, the two-decade investment result worked out exceptionally well, with an annualized rate of return of 15.80%. This would have turned a $10K investment made 20 years ago into $188,081.35 today (as of 07/03/2023). On a total return basis, that’s a result of 1,781.25% (something to think about: how might STZ shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Constellation Brands Inc paid investors a total of $21.01/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 3.56/share, we calculate that STZ has a current yield of approximately 1.44%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 3.56 against the original $14.64/share purchase price. This works out to a yield on cost of 9.84%.

One more investment quote to leave you with:
“Sometimes buying early on the way down looks like being wrong, but it isn’t.” — Seth Klarman