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“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”

— 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 2004.

Start date: 02/20/2004


End date: 02/16/2024
Start price/share: $35.36
End price/share: $27.62
Starting shares: 282.81
Ending shares: 620.69
Dividends reinvested/share: $22.10
Total return: 71.43%
Average annual return: 2.73%
Starting investment: $10,000.00
Ending investment: $17,138.70

The above analysis shows the twenty year investment result worked out as follows, with an annualized rate of return of 2.73%. This would have turned a $10K investment made 20 years ago into $17,138.70 today (as of 02/16/2024). On a total return basis, that’s a result of 71.43% (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 $22.10/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 1.68/share, we calculate that PFE has a current yield of approximately 6.08%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.68 against the original $35.36/share purchase price. This works out to a yield on cost of 17.19%.

Another great investment quote to think about:
“I rarely think the market is right. I believe non-dividend stocks aren’t much more than baseball cards. They are worth what you can convince someone to pay for it.” — Mark Cuban