“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— Warren Buffett
The wisdom of Warren Buffett reflects a value-based philosophy about investing that says investors are buying shares in a business, and encourages strategic thinking about investment time horizon. Before placing a buy order for a stock, a great question we can ask is whether we would still be comfortable making the investment if we couldn’t sell it for many years?
A “buy-and-hold” approach may call for a time horizon that spans a long period of time — maybe even lasting for a ten year holding period. Suppose such a “buy-and-hold” investor had looked into buying shares of Medtronic PLC (NYSE: MDT) back in 2016. Let’s take a look at how such an investment would have worked out for that buy-and-hold investor:
| Start date: | 01/19/2016 |
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| End date: | 01/15/2026 | ||||
| Start price/share: | $74.58 | ||||
| End price/share: | $99.00 | ||||
| Starting shares: | 134.08 | ||||
| Ending shares: | 171.50 | ||||
| Dividends reinvested/share: | $22.14 | ||||
| Total return: | 69.79% | ||||
| Average annual return: | 5.44% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $16,982.08 | ||||
As shown above, the ten year investment result worked out well, with an annualized rate of return of 5.44%. This would have turned a $10K investment made 10 years ago into $16,982.08 today (as of 01/15/2026). On a total return basis, that’s a result of 69.79% (something to think about: how might MDT shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Medtronic PLC paid investors a total of $22.14/share in dividends over the 10 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 2.84/share, we calculate that MDT has a current yield of approximately 2.87%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.84 against the original $74.58/share purchase price. This works out to a yield on cost of 3.85%.
Another great investment quote to think about:
“The best way to measure your investing success is not by whether you’re beating the market but by whether you’ve put in place a financial plan and a behavioral discipline that are likely to get you where you want to go.” — Benjamin Graham
