“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 2004, and take a look at what happened to investors who asked that very question about Dollar Tree Inc (NASD: DLTR), by taking a look at the investment outcome over a twenty year holding period.
| Start date: | 01/12/2004 |
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| End date: | 01/11/2024 | ||||
| Start price/share: | $10.85 | ||||
| End price/share: | $135.22 | ||||
| Starting shares: | 921.66 | ||||
| Ending shares: | 921.66 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 1,146.27% | ||||
| Average annual return: | 13.44% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $124,716.68 | ||||
As we can see, the twenty year investment result worked out quite well, with an annualized rate of return of 13.44%. This would have turned a $10K investment made 20 years ago into $124,716.68 today (as of 01/11/2024). On a total return basis, that’s a result of 1,146.27% (something to think about: how might DLTR shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Here’s one more great investment quote before you go:
“Calling someone who trades actively in the market an investor is like calling someone who repeatedly engages in one-night stands a romantic.” — Warren Buffett
