“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 NetApp, Inc. (NASD: NTAP), by taking a look at the investment outcome over a two-decade holding period.
| Start date: | 08/25/2005 |
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| End date: | 08/22/2025 | ||||
| Start price/share: | $23.73 | ||||
| End price/share: | $110.52 | ||||
| Starting shares: | 421.41 | ||||
| Ending shares: | 565.49 | ||||
| Dividends reinvested/share: | $17.58 | ||||
| Total return: | 524.97% | ||||
| Average annual return: | 9.59% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $62,464.96 | ||||
The above analysis shows the two-decade investment result worked out well, with an annualized rate of return of 9.59%. This would have turned a $10K investment made 20 years ago into $62,464.96 today (as of 08/22/2025). On a total return basis, that’s a result of 524.97% (something to think about: how might NTAP shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that NetApp, Inc. paid investors a total of $17.58/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 2.08/share, we calculate that NTAP has a current yield of approximately 1.88%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.08 against the original $23.73/share purchase price. This works out to a yield on cost of 7.92%.
One more investment quote to leave you with:
“The best stock to buy is the one you already own.” — Peter Lynch
