“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 Autodesk Inc (NASD: ADSK)? Today, we examine the outcome of a two-decade investment into the stock back in 2004.
| Start date: | 12/20/2004 |
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| End date: | 12/17/2024 | ||||
| Start price/share: | $36.01 | ||||
| End price/share: | $302.82 | ||||
| Starting shares: | 277.70 | ||||
| Ending shares: | 277.95 | ||||
| Dividends reinvested/share: | $0.03 | ||||
| Total return: | 741.70% | ||||
| Average annual return: | 11.24% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $84,231.22 | ||||
As we can see, the two-decade investment result worked out quite well, with an annualized rate of return of 11.24%. This would have turned a $10K investment made 20 years ago into $84,231.22 today (as of 12/17/2024). On a total return basis, that’s a result of 741.70% (something to think about: how might ADSK shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Autodesk Inc paid investors a total of $0.03/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 /share, we calculate that ADSK has a current yield of approximately 0.00%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of against the original $36.01/share purchase price. This works out to a yield on cost of 0.00%.
Here’s one more great investment quote before you go:
“All you need for a lifetime of successful investing is a few big winners, and the pluses from those will overwhelm the minuses from the stocks that don’t work out.” — Peter Lynch
