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“Someone’s sitting in the shade today because someone planted a tree a long time ago.”

— Warren Buffett

The Warren Buffett investment philosophy calls for a long-term investment horizon, where a twenty year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Pfizer Inc (NYSE: PFE)? Today, we examine the outcome of a twenty year investment into the stock back in 2003.

Start date: 12/08/2003


End date: 12/07/2023
Start price/share: $32.67
End price/share: $28.63
Starting shares: 306.09
Ending shares: 664.63
Dividends reinvested/share: $21.84
Total return: 90.28%
Average annual return: 3.27%
Starting investment: $10,000.00
Ending investment: $19,038.67

As shown above, the twenty year investment result worked out as follows, with an annualized rate of return of 3.27%. This would have turned a $10K investment made 20 years ago into $19,038.67 today (as of 12/07/2023). On a total return basis, that’s a result of 90.28% (something to think about: how might PFE shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Pfizer Inc paid investors a total of $21.84/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 1.64/share, we calculate that PFE has a current yield of approximately 5.73%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.64 against the original $32.67/share purchase price. This works out to a yield on cost of 17.54%.

More investment wisdom to ponder:
“Money is better than poverty, if only for financial reasons.” — Woody Allen