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

— Warren Buffett

The above quote from Warren Buffett is timeless, and brings into focus the choice about time horizon that any investor should think about before buying a stock they are considering. Behind every stock is an actual business; what will that business look like over a twenty year period?

Today, let’s look backwards in time to 2003, and take a look at what happened to investors who asked that very question about NVIDIA Corp (NASD: NVDA), by taking a look at the investment outcome over a twenty year holding period.

Start date: 08/25/2003


End date: 08/23/2023
Start price/share: $1.51
End price/share: $471.16
Starting shares: 6,622.52
Ending shares: 7,217.33
Dividends reinvested/share: $1.42
Total return: 33,905.15%
Average annual return: 33.82%
Starting investment: $10,000.00
Ending investment: $3,399,855.11

As shown above, the twenty year investment result worked out exceptionally well, with an annualized rate of return of 33.82%. This would have turned a $10K investment made 20 years ago into $3,399,855.11 today (as of 08/23/2023). On a total return basis, that’s a result of 33,905.15% (something to think about: how might NVDA shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that NVIDIA Corp paid investors a total of $1.42/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 .16/share, we calculate that NVDA has a current yield of approximately 0.03%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .16 against the original $1.51/share purchase price. This works out to a yield on cost of 1.99%.

One more piece of investment wisdom to leave you with:
“Behind every stock is a company. Find out what it’s doing.” — Peter Lynch