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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 AFLAC Inc (NYSE: AFL)? Today, we examine the outcome of a twenty year investment into the stock back in 2004.

Start date: 04/16/2004


End date: 04/15/2024
Start price/share: $20.97
End price/share: $80.27
Starting shares: 476.87
Ending shares: 746.33
Dividends reinvested/share: $16.22
Total return: 499.08%
Average annual return: 9.36%
Starting investment: $10,000.00
Ending investment: $59,923.32

The above analysis shows the twenty year investment result worked out well, with an annualized rate of return of 9.36%. This would have turned a $10K investment made 20 years ago into $59,923.32 today (as of 04/15/2024). On a total return basis, that’s a result of 499.08% (something to think about: how might AFL shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that AFLAC Inc paid investors a total of $16.22/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 2/share, we calculate that AFL has a current yield of approximately 2.49%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2 against the original $20.97/share purchase price. This works out to a yield on cost of 11.87%.

Another great investment quote to think about:
“All the opportunity in the world means nothing if you don’t actually pull the trigger.” — Sam Zell