“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 2006, and take a look at what happened to investors who asked that very question about General Dynamics Corp (NYSE: GD), by taking a look at the investment outcome over a twenty year holding period.
| Start date: | 01/09/2006 |
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| End date: | 01/07/2026 | ||||
| Start price/share: | $58.09 | ||||
| End price/share: | $345.64 | ||||
| Starting shares: | 172.15 | ||||
| Ending shares: | 267.87 | ||||
| Dividends reinvested/share: | $62.14 | ||||
| Total return: | 825.88% | ||||
| Average annual return: | 11.77% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $92,662.12 | ||||
The above analysis shows the twenty year investment result worked out quite well, with an annualized rate of return of 11.77%. This would have turned a $10K investment made 20 years ago into $92,662.12 today (as of 01/07/2026). On a total return basis, that’s a result of 825.88% (something to think about: how might GD shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that General Dynamics Corp paid investors a total of $62.14/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 6/share, we calculate that GD has a current yield of approximately 1.74%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 6 against the original $58.09/share purchase price. This works out to a yield on cost of 3.00%.
Another great investment quote to think about:
“I believe in the discipline of mastering the best that other people have ever figured out. I don’t believe in just sitting down and trying to dream it all up yourself. Nobody’s that smart.” — Charlie Munger
