“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— Warren Buffett
The above quote from Warren Buffett is timeless, and brings into focus the choice about time horizon that any investor should think about before buying a stock they are considering. Behind every stock is an actual business; what will that business look like over a two-decade period?
Today, let’s look backwards in time to 2006, and take a look at what happened to investors who asked that very question about Travelers Companies Inc (NYSE: TRV), by taking a look at the investment outcome over a two-decade holding period.
| Start date: | 01/17/2006 |
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| End date: | 01/15/2026 | ||||
| Start price/share: | $46.43 | ||||
| End price/share: | $271.34 | ||||
| Starting shares: | 215.38 | ||||
| Ending shares: | 342.36 | ||||
| Dividends reinvested/share: | $50.21 | ||||
| Total return: | 828.95% | ||||
| Average annual return: | 11.78% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $92,828.13 | ||||
As shown above, the two-decade investment result worked out quite well, with an annualized rate of return of 11.78%. This would have turned a $10K investment made 20 years ago into $92,828.13 today (as of 01/15/2026). On a total return basis, that’s a result of 828.95% (something to think about: how might TRV shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Travelers Companies Inc paid investors a total of $50.21/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 4.4/share, we calculate that TRV has a current yield of approximately 1.62%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 4.4 against the original $46.43/share purchase price. This works out to a yield on cost of 3.49%.
More investment wisdom to ponder:
“If you have more than 120 or 130 I.Q. points, you can afford to give the rest away. You don’t need extraordinary intelligence to succeed as an investor.” — Warren Buffett
