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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 Kellogg Co (NYSE: K)? Today, we examine the outcome of a two-decade investment into the stock back in 2003.

Start date: 09/22/2003


End date: 09/20/2023
Start price/share: $33.54
End price/share: $60.75
Starting shares: 298.15
Ending shares: 545.83
Dividends reinvested/share: $35.38
Total return: 231.59%
Average annual return: 6.17%
Starting investment: $10,000.00
Ending investment: $33,132.18

The above analysis shows the two-decade investment result worked out well, with an annualized rate of return of 6.17%. This would have turned a $10K investment made 20 years ago into $33,132.18 today (as of 09/20/2023). On a total return basis, that’s a result of 231.59% (something to think about: how might K shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Kellogg Co paid investors a total of $35.38/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 2.4/share, we calculate that K has a current yield of approximately 3.95%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.4 against the original $33.54/share purchase price. This works out to a yield on cost of 11.78%.

One more piece of investment wisdom to leave you with:
“Invest for the long haul. Don’t get too greedy and don’t get too scared.” — Shelby Davis