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

— Warren Buffett

Investors can learn a lot from Warren Buffett, whose above quote teaches the importance of thinking about investment time horizon, and asking ourselves before buying any given stock: can we envision holding onto it for years — even a twenty year holding period possibly?

Suppose a “buy-and-hold” investor was considering an investment into Prologis Inc (NYSE: PLD) back in 2004: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full twenty year investment time horizon and then actually held for these past 20 years, here’s how that investment would have turned out.

Start date: 01/09/2004


End date: 01/08/2024
Start price/share: $33.25
End price/share: $133.17
Starting shares: 300.75
Ending shares: 589.31
Dividends reinvested/share: $36.26
Total return: 684.79%
Average annual return: 10.84%
Starting investment: $10,000.00
Ending investment: $78,418.80

The above analysis shows the twenty year investment result worked out quite well, with an annualized rate of return of 10.84%. This would have turned a $10K investment made 20 years ago into $78,418.80 today (as of 01/08/2024). On a total return basis, that’s a result of 684.79% (something to think about: how might PLD shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Prologis Inc paid investors a total of $36.26/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 3.48/share, we calculate that PLD has a current yield of approximately 2.61%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 3.48 against the original $33.25/share purchase price. This works out to a yield on cost of 7.85%.

More investment wisdom to ponder:
“Those who do not remember the past are condemned to repeat it.” — George Santayana