“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
— Warren Buffett
The Warren Buffett investment philosophy calls for a long-term investment horizon, where a twenty year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Walmart Inc (NYSE: WMT)? Today, we examine the outcome of a twenty year investment into the stock back in 2005.
| Start date: | 05/19/2005 |
|
|||
| End date: | 05/16/2025 | ||||
| Start price/share: | $15.84 | ||||
| End price/share: | $98.24 | ||||
| Starting shares: | 631.31 | ||||
| Ending shares: | 948.68 | ||||
| Dividends reinvested/share: | $11.65 | ||||
| Total return: | 831.98% | ||||
| Average annual return: | 11.80% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $93,132.55 | ||||
As shown above, the twenty year investment result worked out quite well, with an annualized rate of return of 11.80%. This would have turned a $10K investment made 20 years ago into $93,132.55 today (as of 05/16/2025). On a total return basis, that’s a result of 831.98% (something to think about: how might WMT shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Walmart Inc paid investors a total of $11.65/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 .94/share, we calculate that WMT has a current yield of approximately 0.96%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .94 against the original $15.84/share purchase price. This works out to a yield on cost of 6.06%.
Another great investment quote to think about:
“The intelligent investor is a realist who sells to optimists and buys from pessimists.” — Benjamin Graham
