“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— Warren Buffett
One of the most important things investors can learn from Warren Buffett, is about how they approach their time horizon for an investment into a stock under consideration. Because immediately after buying shares of a given stock, investors will then be able to check on the day-to-day (and even minute-by-minute) market value. Some days the stock market will be up, other days down. These daily fluctuations can often distract from the long-term view. Today, we look at the result of a two-decade holding period for an investor who was considering Autodesk Inc (NASD: ADSK) back in 2003, bought the stock, ignored the market’s ups and downs, and simply held through to today.
| Start date: | 12/01/2003 |
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| End date: | 11/30/2023 | ||||
| Start price/share: | $11.65 | ||||
| End price/share: | $218.43 | ||||
| Starting shares: | 858.37 | ||||
| Ending shares: | 862.16 | ||||
| Dividends reinvested/share: | $0.09 | ||||
| Total return: | 1,783.23% | ||||
| Average annual return: | 15.80% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $188,308.26 | ||||
As we can see, 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 $188,308.26 today (as of 11/30/2023). On a total return basis, that’s a result of 1,783.23% (something to think about: how might ADSK shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Autodesk Inc paid investors a total of $0.09/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 .015/share, we calculate that ADSK has a current yield of approximately 0.00%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .015 against the original $11.65/share purchase price. This works out to a yield on cost of 0.00%.
One more investment quote to leave you with:
“When the public is most frightened, only the strong are left, and that’s when the market is in the best possible hands.” — Victor Niederhoffer
