“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— 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 W.W. Grainger Inc. (NYSE: GWW)? Today, we examine the outcome of a twenty year investment into the stock back in 2005.
| Start date: | 09/29/2005 |
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| End date: | 09/26/2025 | ||||
| Start price/share: | $62.59 | ||||
| End price/share: | $959.73 | ||||
| Starting shares: | 159.77 | ||||
| Ending shares: | 223.07 | ||||
| Dividends reinvested/share: | $87.95 | ||||
| Total return: | 2,040.83% | ||||
| Average annual return: | 16.55% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $214,096.72 | ||||
As we can see, the twenty year investment result worked out exceptionally well, with an annualized rate of return of 16.55%. This would have turned a $10K investment made 20 years ago into $214,096.72 today (as of 09/26/2025). On a total return basis, that’s a result of 2,040.83% (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 0.94%. 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 $62.59/share purchase price. This works out to a yield on cost of 1.50%.
Another great investment quote to think about:
“You get recessions, you have stock market declines. If you don’t understand that’s going to happen, then you’re not ready, you won’t do well in the markets.” — Peter Lynch
