“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— Warren Buffett
This inspiring quote from Warren Buffett teaches us the importance of considering our investment time horizon when approaching any given investment: Could we envision ourselves holding the stock we are considering for many years? Even a two-decade holding period potentially?
For “buy-and-hold” investors taking a long-term view, what’s important isn’t the short-term stock market fluctuations that will inevitably occur, but what happens over the long haul. Looking back 20 years to 2005, investors considering an investment into shares of Nike (NYSE: NKE) may have been pondering this very question and thinking about their potential investment result over a full two-decade time horizon. Here’s how that would have worked out.
| Start date: | 12/19/2005 |
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| End date: | 12/18/2025 | ||||
| Start price/share: | $10.91 | ||||
| End price/share: | $65.63 | ||||
| Starting shares: | 916.59 | ||||
| Ending shares: | 1,202.65 | ||||
| Dividends reinvested/share: | $14.37 | ||||
| Total return: | 689.30% | ||||
| Average annual return: | 10.88% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $78,987.05 | ||||
The above analysis shows the two-decade investment result worked out quite well, with an annualized rate of return of 10.88%. This would have turned a $10K investment made 20 years ago into $78,987.05 today (as of 12/18/2025). On a total return basis, that’s a result of 689.30% (something to think about: how might NKE shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Nike paid investors a total of $14.37/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 1.64/share, we calculate that NKE has a current yield of approximately 2.50%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.64 against the original $10.91/share purchase price. This works out to a yield on cost of 22.91%.
One more investment quote to leave you with:
“Waiting helps you as an investor and a lot of people just can’t stand to wait. If you didn’t get the deferred-gratification gene, you’ve got to work very hard to overcome that.” — Charlie Munger
