“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
— Warren Buffett
Investors can learn a lot from Warren Buffett, whose above quote teaches the importance of thinking about investment time horizon, and asking ourselves before buying any given stock: can we envision holding onto it for years — even a two-decade holding period possibly?
Suppose a “buy-and-hold” investor was considering an investment into Digital Realty Trust Inc (NYSE: DLR) back in 2005: back then, such an investor may have been pondering this very same question. Had they answered “yes” to a full two-decade investment time horizon and then actually held for these past 20 years, here’s how that investment would have turned out.
| Start date: | 12/05/2005 |
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| End date: | 12/04/2025 | ||||
| Start price/share: | $22.48 | ||||
| End price/share: | $161.02 | ||||
| Starting shares: | 444.84 | ||||
| Ending shares: | 968.12 | ||||
| Dividends reinvested/share: | $65.76 | ||||
| Total return: | 1,458.87% | ||||
| Average annual return: | 14.71% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $155,839.94 | ||||
As we can see, the two-decade investment result worked out quite well, with an annualized rate of return of 14.71%. This would have turned a $10K investment made 20 years ago into $155,839.94 today (as of 12/04/2025). On a total return basis, that’s a result of 1,458.87% (something to think about: how might DLR shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Digital Realty Trust Inc paid investors a total of $65.76/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 4.88/share, we calculate that DLR has a current yield of approximately 3.03%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 4.88 against the original $22.48/share purchase price. This works out to a yield on cost of 13.48%.
Another great investment quote to think about:
“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
