“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 longterm investment horizon, where a twodecade holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Medtronic PLC (NYSE: MDT)? Today, we examine the outcome of a twodecade investment into the stock back in 2004.
Start date:  06/14/2004 


End date:  06/12/2024  
Start price/share:  $49.25  
End price/share:  $82.23  
Starting shares:  203.05  
Ending shares:  302.51  
Dividends reinvested/share:  $27.55  
Total return:  148.75%  
Average annual return:  4.66%  
Starting investment:  $10,000.00  
Ending investment:  $24,875.81 
As we can see, the twodecade investment result worked out as follows, with an annualized rate of return of 4.66%. This would have turned a $10K investment made 20 years ago into $24,875.81 today (as of 06/12/2024). On a total return basis, that’s a result of 148.75% (something to think about: how might MDT shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Medtronic PLC paid investors a total of $27.55/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 exdate is used for the reinvestment of a given dividend).
Based upon the most recent annualized dividend rate of 2.8/share, we calculate that MDT has a current yield of approximately 3.41%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.8 against the original $49.25/share purchase price. This works out to a yield on cost of 6.92%.
Another great investment quote to think about:
“If you can follow only one bit of data, follow the earnings.” — Peter Lynch