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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 two-decade holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Walt Disney Co. (NYSE: DIS)? Today, we examine the outcome of a two-decade investment into the stock back in 2004.

Start date: 06/17/2004


End date: 06/14/2024
Start price/share: $24.52
End price/share: $99.97
Starting shares: 407.83
Ending shares: 501.44
Dividends reinvested/share: $13.88
Total return: 401.29%
Average annual return: 8.39%
Starting investment: $10,000.00
Ending investment: $50,115.96

The above analysis shows the two-decade investment result worked out well, with an annualized rate of return of 8.39%. This would have turned a $10K investment made 20 years ago into $50,115.96 today (as of 06/14/2024). On a total return basis, that’s a result of 401.29% (something to think about: how might DIS shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Walt Disney Co. paid investors a total of $13.88/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 .90/share, we calculate that DIS has a current yield of approximately 0.90%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .90 against the original $24.52/share purchase price. This works out to a yield on cost of 3.67%.

One more piece of investment wisdom to leave you with:
“You can get in much more trouble with a good idea than a bad idea, because you forget that the good idea has limits.” — Benjamin Graham