“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 two-decade holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Carnival Corp (NYSE: CCL)? Today, we examine the outcome of a two-decade investment into the stock back in 2005.
| Start date: | 09/12/2005 |
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| End date: | 09/11/2025 | ||||
| Start price/share: | $51.00 | ||||
| End price/share: | $32.47 | ||||
| Starting shares: | 196.08 | ||||
| Ending shares: | 294.48 | ||||
| Dividends reinvested/share: | $17.65 | ||||
| Total return: | -4.38% | ||||
| Average annual return: | -0.22% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $9,568.84 | ||||
The above analysis shows the two-decade investment result worked out poorly, with an annualized rate of return of -0.22%. This would have turned a $10K investment made 20 years ago into $9,568.84 today (as of 09/11/2025). On a total return basis, that’s a result of -4.38% (something to think about: how might CCL shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Carnival Corp paid investors a total of $17.65/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 2/share, we calculate that CCL has a current yield of approximately 6.16%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2 against the original $51.00/share purchase price. This works out to a yield on cost of 12.08%.
More investment wisdom to ponder:
“There’s a virtuous cycle when people have to defend challenges to their ideas. Any gaps in thinking or analysis become clear pretty quickly when smart people ask good, logical questions.” — Joel Greenblatt
