“Someone’s sitting in the shade today because someone planted a tree a long time ago.”
— Warren Buffett
Fastenal Co. (NASD: FAST) offers a useful case study in long-term dividend compounding. Over the 20-year period beginning in October 2006, a $10,000 investment in FAST grew substantially through a combination of share-price appreciation and reinvested dividends. The result illustrates how total return, not price performance alone, shapes long-run equity outcomes.
FAST 20-Year Return Details
| Start date: | 10/16/2006 |
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| End date: | 10/13/2026 | ||||
| Start price/share: | $5.34 | ||||
| End price/share: | $51.43 | ||||
| Starting shares: | 1,872.66 | ||||
| Ending shares: | 2,988.84 | ||||
| Dividends reinvested/share: | $8.16 | ||||
| Total return: | 1,437.16% | ||||
| Average annual return: | 14.64% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $153,832.71 | ||||
Based on the figures above, a $10,000 investment in Fastenal on 10/16/2006 would have grown to $153,832.71 by 10/13/2026, assuming dividends were reinvested. That equates to a total return of 1,437.16% and an annualized return of 14.64%. These figures were computed using the Dividend Channel DRIP Returns Calculator.
What Drove FAST’s Long-Term Return?
Fastenal’s long-run performance reflects two reinforcing components: capital appreciation and dividend reinvestment. The share price increased from $5.34 to $51.43 over the period, while cash distributions added to the return stream and, when reinvested, increased the investor’s share count from 1,872.66 to 2,988.84.
That increase in share count is central to understanding dividend compounding. Reinvested dividends purchase additional shares, which then generate their own dividends. Over long periods, this process can materially widen the gap between price return and total return, especially for companies that consistently return capital to shareholders.
Why Dividend Reinvestment Matters
Fastenal paid a cumulative $8.16 per share in dividends over the 20-year period examined here. On its own, that cash income is meaningful. Reinvested systematically, it becomes more powerful because each payment increases the base of shares participating in future distributions and price gains.
In this analysis, dividends are assumed to be reinvested on the ex-dividend date using the closing price. That assumption is standard in total-return calculations and helps show how a dividend-paying stock can create value even when part of the return arrives as cash rather than solely through market price gains.
FAST Dividend Yield and Yield on Cost
Using the most recent annualized dividend rate of $1.04 per share, FAST has a current yield of approximately 2.02% based on the ending share price of $51.43.
Another useful measure is yield on cost, which compares the current annual dividend with the original purchase price. Using the $1.04 annualized dividend and the initial $5.34 share price, Fastenal’s yield on cost works out to 19.48%.
Key Takeaways From This 20-Year FAST Investment
The long-term Fastenal result can be summarized in a few points:
- $10,000 grew to $153,832.71 over 20 years.
- Total return reached 1,437.16% with dividends reinvested.
- The annualized return was 14.64%.
- Share count rose by more than 1,100 shares through dividend reinvestment.
- The outcome highlights the cumulative effect of holding a durable dividend payer over an extended period.
For long-horizon investors, the broader lesson is straightforward: when a business combines sustained operating performance with recurring shareholder distributions, time can do much of the heavy lifting. Fastenal’s 20-year total return record is a clear example of that dynamic.
Here’s one more investment quote before you go:
“Cash combined with courage in a time of crisis is priceless.” — Warren Buffett
