“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 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 Verizon Communications Inc (NYSE: VZ)? Today, we examine the outcome of a two-decade investment into the stock back in 2005.
| Start date: | 12/01/2005 |
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| End date: | 11/28/2025 | ||||
| Start price/share: | $28.91 | ||||
| End price/share: | $41.11 | ||||
| Starting shares: | 345.90 | ||||
| Ending shares: | 961.38 | ||||
| Dividends reinvested/share: | $43.62 | ||||
| Total return: | 295.23% | ||||
| Average annual return: | 7.11% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $39,515.17 | ||||
As shown above, the two-decade investment result worked out well, with an annualized rate of return of 7.11%. This would have turned a $10K investment made 20 years ago into $39,515.17 today (as of 11/28/2025). On a total return basis, that’s a result of 295.23% (something to think about: how might VZ shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Verizon Communications Inc paid investors a total of $43.62/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 2.76/share, we calculate that VZ has a current yield of approximately 6.71%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.76 against the original $28.91/share purchase price. This works out to a yield on cost of 23.21%.
One more investment quote to leave you with:
“Value investing requires a great deal of hard work, unusually strict discipline, and a long-term investment horizon. Few are willing and able to devote sufficient time and effort to become value investors, and only a fraction of those have the proper mind-set to succeed.” — Seth Klarman
