“I buy on the assumption that they could close the market the next day and not reopen it for five years.”
— 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 five year period?
Today, let’s look backwards in time to 2020, 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 five year holding period.
| Start date: | 01/13/2020 |
|
|||
| End date: | 01/10/2025 | ||||
| Start price/share: | $76.92 | ||||
| End price/share: | $153.40 | ||||
| Starting shares: | 130.01 | ||||
| Ending shares: | 130.01 | ||||
| Dividends reinvested/share: | $0.00 | ||||
| Total return: | 99.43% | ||||
| Average annual return: | 14.81% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $19,940.42 | ||||
As shown above, the five year investment result worked out quite well, with an annualized rate of return of 14.81%. This would have turned a $10K investment made 5 years ago into $19,940.42 today (as of 01/10/2025). On a total return basis, that’s a result of 99.43% (something to think about: how might DVA shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Here’s one more great investment quote before you go:
“I’d like to live as a poor man with lots of money.” — Pablo Picasso
