“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— Warren Buffett
The wisdom of Warren Buffett reflects a value-based philosophy about investing that says investors are buying shares in a business, and encourages strategic thinking about investment time horizon. Before placing a buy order for a stock, a useful question for any long-term investor is whether we would still be comfortable making the investment if we could not sell it for many years.
A disciplined “buy-and-hold” approach may call for a time horizon that spans decades rather than quarters, especially for mature, dividend-paying businesses. One practical way to evaluate such a strategy is to look backward and assess how a simple, rules-based investment would have performed over a long period.
Suppose a buy-and-hold investor had purchased shares of Archer Daniels Midland Co. (NYSE: ADM) back in 2006 and held those shares for 20 years, with all dividends reinvested. Archer Daniels Midland is one of the world’s largest agricultural processors and food ingredient providers, operating across oilseeds, corn processing, carbohydrate solutions, and nutrition businesses. Its diversified, globally integrated model and long record of paying dividends have often attracted income-oriented investors looking for exposure to the agricultural value chain.
Below we examine how such an investment would have worked out for that hypothetical buy-and-hold investor:
| Start date: | 04/03/2006 |
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| End date: | 04/02/2026 | ||||
| Start price/share: | $35.21 | ||||
| End price/share: | $73.83 | ||||
| Starting shares: | 284.01 | ||||
| Ending shares: | 466.22 | ||||
| Dividends reinvested/share: | $22.74 | ||||
| Total return: | 244.21% | ||||
| Average annual return: | 6.37% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $34,409.40 | ||||
As we can see, the two-decade investment result worked out well, with an annualized rate of return of 6.37%. This would have turned a $10K investment made 20 years ago into $34,409.40 today (as of 04/02/2026). On a total return basis, that is a result of 244.21% — a roughly 3.4-fold increase in capital over the period. For context, that holding span includes the 2008‑2009 financial crisis, multiple commodity price cycles, and the 2020 pandemic shock, underscoring the resilience required of long-term shareholders. [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
For buy-and-hold investors, it is important to distinguish between price return and total return. Price return reflects only the change in share price, whereas total return also incorporates dividends. In ADM’s case, dividends, and the compounding that results from reinvesting them, have been a meaningful driver of overall performance.
Many investors refuse to own any stock that lacks a dividend; in the case of Archer Daniels Midland Co., investors have received $22.74/share in dividends over the 20 years examined in the exercise above. This means total return was driven not just by share price appreciation, but also by the dividends received (and by what the investor did with those dividends). For this exercise, the assumption is that dividends are reinvested — i.e., used to purchase additional shares via a dividend reinvestment plan, with the calculations based on the closing price on the ex-dividend date.
Reinvestment is what allowed the initial 284.01 shares to grow to 466.22 shares by April 2026, even though no additional cash capital was contributed after the original $10,000 outlay. This share count growth is central to the power of compounding for income-producing equities.
ADM also has a long history as a dividend payer. The company is widely recognized as a “dividend aristocrat,” a term commonly used for S&P 500 constituents that have raised their regular cash dividend for at least 25 consecutive years. Over the last two decades, ADM has regularly increased its payout, though the pace of increase has varied alongside earning cycles and commodity markets.
Based upon the most recent annualized dividend rate of 2.08/share, we calculate that ADM has a current yield of approximately 2.82%. Another useful data point is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.08 against the original $35.21/share purchase price. This works out to a yield on cost of 8.01%.
Yield on cost illustrates how a patient shareholder can eventually receive a high income stream relative to the original dollars invested, provided the dividend grows over time. While current yield is what matters for new buyers assessing today’s opportunity, yield on cost is a helpful way for long-term investors to frame the income benefits of having stayed invested through volatility.
Of course, no single name should be viewed in isolation from broader portfolio considerations. ADM is a cyclical business closely tied to agricultural commodity markets, global trade flows, and biofuel and food ingredient demand. Over the last 20 years, shareholders have experienced periods of elevated volatility as the company navigated swings in crop prices, shifts in government policy around ethanol and renewable fuels, and changes in global supply chains.
For investors considering how ADM or similar dividend-paying cyclicals might perform over the next 20 years, several themes are likely to matter: the ongoing development of renewable fuels and sustainable aviation fuel, demand growth in emerging markets, increasing emphasis on traceability and sustainability across the food supply chain, and management’s capital allocation discipline between dividends, share repurchases, and strategic investments.
Historical performance is no guarantee of future results, and the 6.37% annualized return observed here should be weighed against an investor’s objectives, risk tolerance, and alternatives — including broad equity index funds. Nonetheless, the ADM example highlights how a relatively steady, dividend-growing industrial business can compound capital over a full market cycle when dividends are systematically reinvested.
One more investment quote to leave you with:
“Invest for the long haul. Don’t get too greedy and don’t get too scared.” — Shelby Davis
