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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 two-decade holding period possibly?

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

Start date: 02/06/2004


End date: 02/05/2024
Start price/share: $48.50
End price/share: $120.27
Starting shares: 206.19
Ending shares: 248.59
Dividends reinvested/share: $12.44
Total return: 198.98%
Average annual return: 5.63%
Starting investment: $10,000.00
Ending investment: $29,923.08

As shown above, the two-decade investment result worked out well, with an annualized rate of return of 5.63%. This would have turned a $10K investment made 20 years ago into $29,923.08 today (as of 02/05/2024). On a total return basis, that’s a result of 198.98% (something to think about: how might GL shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Globe Life Inc paid investors a total of $12.44/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 .9/share, we calculate that GL has a current yield of approximately 0.75%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .9 against the original $48.50/share purchase price. This works out to a yield on cost of 1.55%.

More investment wisdom to ponder:
“A lot of people with high IQs are terrible investors because they’ve got terrible temperaments. You need to keep raw, irrational emotion under control.” — Charlie Munger