“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
— Warren Buffett
The Warren Buffett investment philosophy calls for a long-term investment horizon, where a twenty year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Apple Inc (NASD: AAPL)? Today, we examine the outcome of a twenty year investment into the stock back in 2005.
| Start date: | 03/28/2005 |
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| End date: | 03/24/2025 | ||||
| Start price/share: | $1.52 | ||||
| End price/share: | $220.73 | ||||
| Starting shares: | 6,578.95 | ||||
| Ending shares: | 7,808.36 | ||||
| Dividends reinvested/share: | $8.99 | ||||
| Total return: | 17,135.40% | ||||
| Average annual return: | 29.37% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $1,724,533.21 | ||||
As we can see, the twenty year investment result worked out exceptionally well, with an annualized rate of return of 29.37%. This would have turned a $10K investment made 20 years ago into $1,724,533.21 today (as of 03/24/2025). On a total return basis, that’s a result of 17,135.40% (something to think about: how might AAPL shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Apple Inc paid investors a total of $8.99/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 1/share, we calculate that AAPL has a current yield of approximately 0.45%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1 against the original $1.52/share purchase price. This works out to a yield on cost of 29.61%.
One more piece of investment wisdom to leave you with:
“When everyone is going right, look left.” — Sam Zell
