“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
— Warren Buffett
One of the most important things investors can learn from Warren Buffett, is about how they approach their time horizon for an investment into a stock under consideration. Because immediately after buying shares of a given stock, investors will then be able to check on the day-to-day (and even minute-by-minute) market value. Some days the stock market will be up, other days down. These daily fluctuations can often distract from the long-term view. Today, we look at the result of a twenty year holding period for an investor who was considering M & T Bank Corp (NYSE: MTB) back in 2005, bought the stock, ignored the market’s ups and downs, and simply held through to today.
| Start date: | 11/10/2005 |
|
|||
| End date: | 11/07/2025 | ||||
| Start price/share: | $110.40 | ||||
| End price/share: | $185.86 | ||||
| Starting shares: | 90.58 | ||||
| Ending shares: | 163.39 | ||||
| Dividends reinvested/share: | $69.60 | ||||
| Total return: | 203.68% | ||||
| Average annual return: | 5.71% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $30,370.62 | ||||
The above analysis shows the twenty year investment result worked out well, with an annualized rate of return of 5.71%. This would have turned a $10K investment made 20 years ago into $30,370.62 today (as of 11/07/2025). On a total return basis, that’s a result of 203.68% (something to think about: how might MTB shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that M & T Bank Corp paid investors a total of $69.60/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 6/share, we calculate that MTB has a current yield of approximately 3.23%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 6 against the original $110.40/share purchase price. This works out to a yield on cost of 2.93%.
One more piece of investment wisdom to leave you with:
“Finding the best person or the best organization to invest your money is one of the most important financial decisions you’ll ever make.” — Bill Gross
