“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
— 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 2005, and take a look at what happened to investors who asked that very question about W.W. Grainger Inc. (NYSE: GWW), by taking a look at the investment outcome over a two-decade holding period.
| Start date: | 08/12/2005 |
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| End date: | 08/11/2025 | ||||
| Start price/share: | $63.66 | ||||
| End price/share: | $939.76 | ||||
| Starting shares: | 157.08 | ||||
| Ending shares: | 219.32 | ||||
| Dividends reinvested/share: | $87.95 | ||||
| Total return: | 1,961.05% | ||||
| Average annual return: | 16.32% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $205,971.61 | ||||
As shown above, the two-decade investment result worked out exceptionally well, with an annualized rate of return of 16.32%. This would have turned a $10K investment made 20 years ago into $205,971.61 today (as of 08/11/2025). On a total return basis, that’s a result of 1,961.05% (something to think about: how might GWW shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that W.W. Grainger Inc. paid investors a total of $87.95/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 9.04/share, we calculate that GWW 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 9.04 against the original $63.66/share purchase price. This works out to a yield on cost of 1.51%.
More investment wisdom to ponder:
“If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.” — Peter Lynch
