“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 Capital One Financial Corp (NYSE: COF)? Today, we examine the outcome of a two-decade investment into the stock back in 2005.
| Start date: | 09/06/2005 |
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| End date: | 09/04/2025 | ||||
| Start price/share: | $80.50 | ||||
| End price/share: | $226.32 | ||||
| Starting shares: | 124.22 | ||||
| Ending shares: | 168.61 | ||||
| Dividends reinvested/share: | $25.52 | ||||
| Total return: | 281.59% | ||||
| Average annual return: | 6.92% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $38,143.26 | ||||
As shown above, the two-decade investment result worked out well, with an annualized rate of return of 6.92%. This would have turned a $10K investment made 20 years ago into $38,143.26 today (as of 09/04/2025). On a total return basis, that’s a result of 281.59% (something to think about: how might COF shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Capital One Financial Corp paid investors a total of $25.52/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 2.4/share, we calculate that COF has a current yield of approximately 1.06%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.4 against the original $80.50/share purchase price. This works out to a yield on cost of 1.32%.
Here’s one more great investment quote before you go:
“In the end, how your investments behave is much less important than how you behave.” — Benjamin Graham
