“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
— Warren Buffett
Investors can learn a lot from Warren Buffett, whose above quote teaches the importance of thinking about investment time horizon, and asking ourselves before buying any given stock: can we envision holding onto it for years — even a two-decade holding period possibly?
Suppose a “buy-and-hold” investor was considering an investment into Arthur J. Gallagher & Co. (NYSE: AJG) back in 2005: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full two-decade investment time horizon and then actually held for these past 20 years, here’s how that investment would have turned out.
| Start date: | 08/01/2005 |
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| End date: | 07/30/2025 | ||||
| Start price/share: | $27.70 | ||||
| End price/share: | $285.84 | ||||
| Starting shares: | 361.01 | ||||
| Ending shares: | 666.13 | ||||
| Dividends reinvested/share: | $31.94 | ||||
| Total return: | 1,804.08% | ||||
| Average annual return: | 15.87% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $190,522.35 | ||||
As shown above, the two-decade investment result worked out exceptionally well, with an annualized rate of return of 15.87%. This would have turned a $10K investment made 20 years ago into $190,522.35 today (as of 07/30/2025). On a total return basis, that’s a result of 1,804.08% (something to think about: how might AJG shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Arthur J. Gallagher & Co. paid investors a total of $31.94/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 2.6/share, we calculate that AJG has a current yield of approximately 0.91%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.6 against the original $27.70/share purchase price. This works out to a yield on cost of 3.29%.
Here’s one more great investment quote before you go:
“Every day that you’re not selling an asset in your portfolio, you’re choosing to buy it.” — Sam Zell
