“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 twenty-year holding period, or even longer, fits comfortably within the strategy. Medical-device manufacturers such as Zimmer Biomet Holdings Inc (NYSE: ZBH) are often viewed as durable businesses benefiting from aging demographics and steady demand for orthopedic procedures.
But how would a strict buy-and-hold investor have fared by committing capital to Zimmer Biomet two decades ago and simply letting that position run? Below we examine the outcome of a $10,000 investment made in 2006 and held through 2026, with dividends reinvested, using data from Dividend Channel’s DRIP Returns Calculator.
| Start date: | 04/07/2006 |
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| End date: | 04/06/2026 | ||||
| Start price/share: | $64.03 | ||||
| End price/share: | $91.00 | ||||
| Starting shares: | 156.18 | ||||
| Ending shares: | 176.34 | ||||
| Dividends reinvested/share: | $12.86 | ||||
| Total return: | 60.47% | ||||
| Average annual return: | 2.39% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $16,042.18 | ||||
As we can see, the twenty-year investment result worked out as follows, with an annualized rate of return of 2.39%. That would have turned a $10,000 investment made 20 years ago into $16,042.18 today (as of 04/06/2026). On a total return basis, that is a gain of 60.47% including reinvested dividends, against a backdrop that included the 2008-2009 financial crisis, the eurozone debt crisis, the COVID-19 pandemic and associated postponement of elective procedures, and periods of reimbursement and pricing pressure in the medical-device industry.
For context, over roughly the same 2006‑2026 span, broad U.S. equity indices such as the S&P 500 have historically produced mid-to-high single-digit annualized total returns, meaning Zimmer Biomet’s 2.39% annualized performance would have lagged a passive, diversified index approach over this particular window. The lesson for long-horizon investors is that even in high-quality, entrenched franchises, entry valuation, regulatory and competitive dynamics, and company-specific execution all matter for realized returns.
It is also worth recalling that Zimmer Biomet in its current form reflects a series of corporate actions. Zimmer Holdings traces its roots back to 1927 as a maker of orthopedic implants. In 2001 it was spun off from Bristol-Myers Squibb as an independent public company, and in 2015 Zimmer completed the acquisition of Biomet, creating Zimmer Biomet Holdings Inc. Over the last two decades, the company has expanded its portfolio into hip and knee replacements, trauma products, spine and dental solutions, and more recently robotics-assisted surgery and digital health tools intended to support surgeons and improve patient outcomes. These strategic moves have helped sustain revenue, but the share-price trajectory and total return highlight that business resilience does not always translate into market-beating performance.
[These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
The Role Of Dividends And Reinvestment
Always an important consideration with a dividend-paying company is: should we reinvest our dividends? Over the past 20 years, Zimmer Biomet Holdings Inc has paid $12.86/share in dividends. For the above analysis, we assume that the investor reinvests dividends into new shares of stock, allowing for the compounding effect of a dividend reinvestment plan (DRIP). For the above calculations, the reinvestment is performed using the closing price on the ex-dividend date for that dividend.
The impact of reinvestment can be seen in the share count. The original $10,000 stake bought 156.18 shares at the April 2006 starting price. Thanks to dividend reinvestment, the ending share count rises to 176.34 shares by April 2026. That incremental ownership — nearly 13% more shares than the starting position — represents additional exposure to any future capital appreciation and dividend growth the company may deliver.
Based upon the most recent annualized dividend rate of 0.96/share, we calculate that ZBH has a current yield of approximately 1.05%. Another interesting data point we can examine is “yield on cost” — in other words, we can express the current annualized dividend of 0.96 against the original $64.03/share purchase price. This works out to a yield on cost of 1.64%.
From an income investor’s standpoint, that figure underscores that Zimmer Biomet has been a modest dividend payer rather than a high-yielding cash-distribution story. Management has generally prioritized balance-sheet flexibility, R&D, and strategic M&A over very high payout ratios, which aligns with the capital-intensive reality of the medical-device sector but means total return has depended more heavily on earnings growth and valuation than on income.
Quality Business, Mixed Long-Term Return
Zimmer Biomet operates in an oligopolistic segment of the healthcare market, competing with other large orthopedic manufacturers in supplying joint-replacement systems, fixation devices, and related surgical tools to hospitals around the world. Structural drivers, including rising life expectancy, higher rates of osteoarthritis, and increasing access to care in emerging markets, support volume growth over time.
However, for long-term shareholders, the past twenty years illustrate that even in high-barrier, innovation-driven industries, stock performance can be constrained by factors such as:
- Regulatory scrutiny and the need for continuous clinical evidence to support product adoption.
- Pricing pressure from hospital customers and payers focused on value-based care.
- Periods of slower procedure growth, notably when elective surgeries were deferred during macroeconomic stress or the COVID-19 pandemic.
- Execution risk around large integrations, as seen with the Zimmer-Biomet combination.
From a Buffett-style, “forever” holding-period perspective, Zimmer Biomet’s 2006‑2026 track record serves as a reminder that:
- Even seemingly durable franchises may not deliver index-beating returns from every start date.
- Entry valuation and expectations embedded in the share price at purchase can heavily influence long-run outcomes.
- Diversification across sectors and business models can mitigate the risk of extended periods of underperformance in any single name.
Looking ahead, investors evaluating ZBH for the next 20 years will likely focus on the company’s ability to innovate in robotics and digital surgery, expand into faster-growing adjacencies, navigate pricing headwinds, and convert its installed base and surgeon relationships into steady cash flows and disciplined capital allocation.
Here’s one more great investment quote before you go:
“The most important quality for an investor is temperament, not intellect. You need a temperament that neither derives great pleasure from being with the crowd or against the crowd.” — Warren Buffett
