“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— Warren Buffett
A key lesson that long-term investors can draw from Warren Buffett is how to frame a potential stock investment in the context of an extended time horizon. Every buyer of a stock faces a choice: either fixate on the inevitable short-term volatility that accompanies public markets, or focus on identifying businesses that can be owned calmly for decades — perhaps over a twenty year holding period or longer. Investors can even choose to largely ignore the market’s short-run quotations, committing at the outset to hold quality businesses for many years regardless of interim price fluctuations.
In that spirit, we examine what would have happened over a twenty year holding period had an investor, back in 2006, decided to purchase shares of Cintas Corporation (NASD: CTAS) and simply hold through to today, with dividends reinvested throughout. Cintas is a leading provider of corporate identity uniforms, facility services, and safety products across North America, and has long been cited as an example of a durable, cash-generative business with a shareholder-friendly capital allocation policy.
| Start date: | 03/20/2006 |
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| End date: | 03/18/2026 | ||||
| Start price/share: | $10.51 | ||||
| End price/share: | $185.44 | ||||
| Starting shares: | 951.47 | ||||
| Ending shares: | 1,243.47 | ||||
| Dividends reinvested/share: | $11.25 | ||||
| Total return: | 2,205.88% | ||||
| Average annual return: | 16.98% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $230,465.31 | ||||
The above analysis shows that the twenty year investment outcome would have been exceptional, with an annualized rate of return of 16.98%. That would have turned a $10,000 investment made 20 years ago into $230,465.31 as of 03/18/2026. On a total return basis, that is a gain of 2,205.88% — a vivid illustration of the power of compounding when a high-quality business grows steadily over long stretches of time. It also underscores the importance of staying invested through periods of market stress, including the 2008‑2009 financial crisis and the 2020 pandemic shock.
[These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notably, Cintas Corporation paid investors a total of $11.25 per share in dividends over the 20‑year holding period, providing a second, material component of total return beyond share price appreciation alone. Much like watering a tree, reinvesting dividends can help an investment grow over time — for the above calculations, dividend reinvestment is assumed (using the closing price on the ex‑dividend date as the reinvestment price for each distribution).
Over this period, Cintas steadily raised its dividend and also complemented those increases with occasional special dividends and meaningful share repurchases. The combination of earnings growth, multiple expansion, and disciplined capital returns helped translate the company’s underlying business progress into shareholder wealth creation.
Based upon the most recent annualized dividend rate of 1.80 per share, we calculate that CTAS has a current yield of approximately 0.97%, which is modest in absolute terms and below the yield of many high-income equities. However, yield alone can be a misleading metric. Cintas has a long history of dividend growth, and investors who purchased at much lower historical prices have seen their effective income stream climb significantly over time.
Another instructive datapoint is ‘yield on cost’ — in other words, expressing the current annualized dividend of 1.80 against the original $10.51 per share purchase price. This works out to a yield on cost of 9.23%. Put differently, an investor who committed capital to Cintas shares twenty years ago would today be receiving close to a 9% annual cash return on the original outlay, even before considering any future dividend increases or the large unrealized capital gain embedded in the position.
From a fundamental standpoint, Cintas’s performance over this timeframe has been supported by several structural drivers: the outsourcing trend among businesses for non-core services such as uniform rental and facility maintenance; a diversified and recurring-revenue customer base across industries; and disciplined, acquisitive growth that has expanded the company’s geographic footprint and product offering. Management has emphasized operational efficiency and margin expansion, which has translated into robust earnings per share growth, a key long-term share price driver.
For long-term investors evaluating potential holdings today, the Cintas case study highlights several broader lessons:
- Focusing on durable business models with recurring revenues and pricing power can be more important than chasing near-term high yields.
- Reinvested dividends, even from lower-yielding but faster-growing companies, can materially enhance long-run outcomes.
- Patience through market cycles is essential; some of the best returns accrue to those who hold quality franchises across multiple economic environments.
- Yield on cost naturally rises over time when dividends grow faster than inflation, rewarding investors who commit early and stay the course.
Looking ahead, there is no guarantee that Cintas will replicate its past performance over the next twenty years; future returns will depend on valuation, competitive dynamics, macroeconomic conditions, and management execution. Nonetheless, the historical record provides a concrete example of what can be achieved when capital is allocated to a resilient, growing enterprise and then left largely undisturbed.
More investment wisdom to ponder:
“If you can follow only one bit of data, follow the earnings.” — Peter Lynch
