“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 Chubb Ltd (NYSE: CB)? Today, we examine the outcome of a two-decade investment into the stock back in 2005.
| Start date: | 07/22/2005 |
|
|||
| End date: | 07/21/2025 | ||||
| Start price/share: | $23.26 | ||||
| End price/share: | $274.02 | ||||
| Starting shares: | 429.92 | ||||
| Ending shares: | 647.00 | ||||
| Dividends reinvested/share: | $44.54 | ||||
| Total return: | 1,672.91% | ||||
| Average annual return: | 15.45% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $177,240.32 | ||||
As we can see, the two-decade investment result worked out exceptionally well, with an annualized rate of return of 15.45%. This would have turned a $10K investment made 20 years ago into $177,240.32 today (as of 07/21/2025). On a total return basis, that’s a result of 1,672.91% (something to think about: how might CB shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Chubb Ltd paid investors a total of $44.54/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 3.88/share, we calculate that CB has a current yield of approximately 1.42%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 3.88 against the original $23.26/share purchase price. This works out to a yield on cost of 6.10%.
Another great investment quote to think about:
“The right time for a company to finance its growth is not when it needs capital, but rather when the market is most receptive to providing capital.” — Michael Milken
