“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
— Warren Buffett
One of the most important lessons investors can draw from Warren Buffett is how to think about time horizon when evaluating an equity investment. Immediately after buying shares, it becomes possible to track every tick in the market value — daily, even minute-by-minute. Some days the market will be up, other days down, and these short-term moves can distract from the power of a long holding period.
To illustrate the impact of a multi-decade perspective, consider the experience of a hypothetical investor who evaluated Expedia Group Inc (now trading as NASD: EXPE) in early 2006, committed capital, ignored the subsequent volatility, and simply held the position for twenty years.
| Start date: | 03/30/2006 |
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| End date: | 03/27/2026 | ||||
| Start price/share: | $39.62 | ||||
| End price/share: | $225.81 | ||||
| Starting shares: | 252.40 | ||||
| Ending shares: | 439.08 | ||||
| Dividends reinvested/share: | $26.40 | ||||
| Total return: | 891.49% | ||||
| Average annual return: | 12.15% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $99,111.03 | ||||
As the table indicates, the two-decade investment outcome was strong, with an annualized rate of return of 12.15%. A $10,000 initial allocation on 03/30/2006 would have grown to $99,111.03 by 03/27/2026, assuming dividends were reinvested. On a total return basis, that translates into a gain of 891.49%. For long-term investors, this raises a natural question: how might EXPE perform over the next twenty years?
Several key drivers underpinned this compounding. Over the period, Expedia Group expanded from a primarily U.S.-focused online travel agency into a diversified global travel platform. The company operates well-known consumer brands including Expedia.com, Hotels.com, Vrbo, Orbitz, Travelocity and Hotwire, while also running a substantial business-to-business segment that powers travel bookings for airlines, hotels and corporate partners.
That strategic evolution has taken place against a backdrop of growing online travel penetration worldwide. The shift from offline to online booking, the increasing use of mobile devices for travel planning, and the recovery in global travel demand following the 2008–2009 financial crisis and the COVID-19 pandemic all influenced Expedia’s revenue trajectory and share price over the period.
Beyond price appreciation, another component of EXPE’s total return over these twenty years was cash returned to shareholders. In total, Expedia Group paid $26.40 per share in dividends, which — when reinvested — contributed significantly to the ending share count growing from 252.40 to 439.08 shares. Automatic reinvestment is often an underappreciated tool for long-term investors: every dividend payment buys additional shares, which in turn generate their own dividends and potential price gains, creating a compounding effect over time. (For the purpose of these calculations, the closing price on the ex-dividend date is used.)
Using the most recent annualized dividend rate of $1.92 per share, EXPE currently yields approximately 0.85% on the ending share price of $225.81. For an investor who established a position at $39.62 per share in 2006, that same $1.92 dividend stream represents a “yield on cost” of 2.15%. Yield on cost is a useful way to gauge how the income profile of a long-held position has evolved relative to the original capital deployed.
It is worth noting that Expedia Group’s dividend policy has not been static over time. Like many travel-related companies, Expedia suspended its dividend during the COVID-19 crisis in order to preserve liquidity amid an unprecedented collapse in global travel volumes, subsequently resuming shareholder distributions once demand recovered and balance sheet flexibility improved. That history underscores that dividend income from cyclical businesses can be more volatile than that of more defensive sectors such as utilities or consumer staples.
From a risk perspective, EXPE’s journey over the past two decades has not been linear. The stock experienced significant drawdowns during the global financial crisis, the eurozone crisis, and especially during the 2020 pandemic-related shutdowns, when travel-related equities saw sharp, rapid price declines. Investors who realized the full 891.49% total return necessarily held through periods of elevated uncertainty, headline risk and earnings volatility — a practical demonstration of Buffett’s emphasis on temperament and time horizon.
For context, a 12.15% annualized return over twenty years compares favorably with broad U.S. equity benchmarks. While exact index performance varies by start and end date, long-run annualized total returns for the S&P 500 have historically clustered in the high-single to low-double-digit range. EXPE’s 20-year profile, as calculated by the Dividend Channel DRIP Returns Calculator, therefore represents a meaningful outperformance relative to typical large-cap benchmarks over the same horizon, albeit with higher sector- and company-specific risk.
Looking ahead, Expedia Group’s future return path will likely depend on several factors, including competitive dynamics with other global online travel agencies and meta-search platforms, the pace of adoption of alternative accommodations, the evolution of its B2B partnerships, the company’s ability to monetize its technology and loyalty ecosystems, and the broader health of global travel demand. As always, past performance does not guarantee future results, and prospective investors should carefully assess valuation, balance sheet strength and risk tolerance before allocating capital.
Another investing maxim that speaks to risk management bears consideration:
“Never test the depth of a river with both feet.” — Warren Buffett
For long-term investors, the Expedia example highlights two enduring principles. First, time in the market — rather than attempting to time the market — can allow fundamentally sound businesses to compound value despite interim volatility. Second, reinvested dividends, even when the headline yield appears modest, can materially enhance total returns over multi-decade periods.
