“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— 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 twenty year period?
Today, let’s look backwards in time to 2005, and take a look at what happened to investors who asked that very question about Nordson Corp. (NASD: NDSN), by taking a look at the investment outcome over a twenty year holding period.
| Start date: | 03/28/2005 |
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| End date: | 03/24/2025 | ||||
| Start price/share: | $18.55 | ||||
| End price/share: | $207.58 | ||||
| Starting shares: | 539.08 | ||||
| Ending shares: | 682.74 | ||||
| Dividends reinvested/share: | $22.41 | ||||
| Total return: | 1,317.22% | ||||
| Average annual return: | 14.18% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $141,840.67 | ||||
As we can see, the twenty year investment result worked out quite well, with an annualized rate of return of 14.18%. This would have turned a $10K investment made 20 years ago into $141,840.67 today (as of 03/24/2025). On a total return basis, that’s a result of 1,317.22% (something to think about: how might NDSN shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Nordson Corp. paid investors a total of $22.41/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 3.12/share, we calculate that NDSN has a current yield of approximately 1.50%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 3.12 against the original $18.55/share purchase price. This works out to a yield on cost of 8.09%.
More investment wisdom to ponder:
“Nearly every time I strayed from the herd, I’ve made a lot of money. Wandering away from the action is the way to find the new action.” — Jim Rogers
