“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 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 Cardinal Health, Inc. (NYSE: CAH)? Today, we examine the outcome of a twenty year investment into the stock back in 2005.
| Start date: | 04/29/2005 |
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| End date: | 04/28/2025 | ||||
| Start price/share: | $55.57 | ||||
| End price/share: | $138.24 | ||||
| Starting shares: | 179.95 | ||||
| Ending shares: | 389.88 | ||||
| Dividends reinvested/share: | $36.14 | ||||
| Total return: | 438.97% | ||||
| Average annual return: | 8.78% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $53,874.30 | ||||
The above analysis shows the twenty year investment result worked out well, with an annualized rate of return of 8.78%. This would have turned a $10K investment made 20 years ago into $53,874.30 today (as of 04/28/2025). On a total return basis, that’s a result of 438.97% (something to think about: how might CAH shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Cardinal Health, Inc. paid investors a total of $36.14/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 2.0224/share, we calculate that CAH has a current yield of approximately 1.46%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.0224 against the original $55.57/share purchase price. This works out to a yield on cost of 2.63%.
One more piece of investment wisdom to leave you with:
“If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring.” — George Soros
