“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 twenty year 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 Skyworks Solutions Inc (NASD: SWKS), by taking a look at the investment outcome over a twenty year holding period.
| Start date: | 10/03/2005 |
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| End date: | 09/30/2025 | ||||
| Start price/share: | $7.04 | ||||
| End price/share: | $76.98 | ||||
| Starting shares: | 1,420.45 | ||||
| Ending shares: | 1,756.63 | ||||
| Dividends reinvested/share: | $20.28 | ||||
| Total return: | 1,252.25% | ||||
| Average annual return: | 13.90% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $135,140.09 | ||||
As we can see, the twenty year investment result worked out quite well, with an annualized rate of return of 13.90%. This would have turned a $10K investment made 20 years ago into $135,140.09 today (as of 09/30/2025). On a total return basis, that’s a result of 1,252.25% (something to think about: how might SWKS shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Skyworks Solutions Inc paid investors a total of $20.28/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 2.84/share, we calculate that SWKS has a current yield of approximately 3.69%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.84 against the original $7.04/share purchase price. This works out to a yield on cost of 52.41%.
Here’s one more great investment quote before you go:
“Markets are constantly in a state of uncertainty and flux and money is made by discounting the obvious and betting on the unexpected.” — George Soros
