“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
— 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 two-decade 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 DaVita Inc (NYSE: DVA), by taking a look at the investment outcome over a two-decade holding period.
| Start date: | 05/10/2004 |
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| End date: | 05/07/2024 | ||||
| Start price/share: | $15.77 | ||||
| End price/share: | $137.69 | ||||
| Starting shares: | 634.12 | ||||
| Ending shares: | 634.12 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 773.11% | ||||
| Average annual return: | 11.44% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $87,313.18 | ||||
The above analysis shows the two-decade investment result worked out quite well, with an annualized rate of return of 11.44%. This would have turned a $10K investment made 20 years ago into $87,313.18 today (as of 05/07/2024). On a total return basis, that’s a result of 773.11% (something to think about: how might DVA shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
One more investment quote to leave you with:
“The right time for a company to finance its growth is not when it needs capital, but rather when the market is most receptive to providing capital.” — Michael Milken
