A $10,000 investment in CB in 2004 is worth a small fortune today

“If we own parts of excellent companies with excellent management, our preferred holding period is forever.”

– Warren Buffett

The above quote from Warren Buffett is timeless and conveys the choice time horizon what every investor should think about before buying a stock they are considering. Behind every stock is a real company; what will that be company look like over a period of twenty years?

Today, let’s take a look back in time to 2004 and see what happened to investors who asked that exact question about Chubb Ltd (NYSE: CB) by looking at investment performance over a twenty-year holding period.

Starting date: 06/07/2004
$10,000

06/07/2004
$188,156

06/04/2024
End date: 06/04/2024
Starting price/share: $21.50
Final price/share: $264.81
Starting shares: 465.12
End shares: 710.85
Dividends reinvested/share: $42.35
Total refund: 1,782.41%
Average annual return: 15.80%
Initial investment: $10,000.00
End investment: $188,156.95

As shown above, the investment result over the past twenty years has been exceptionally good, with an annualized return of 15.80%. This would have turned a $10,000 investment made twenty years ago into… $188,156.95 today (from 06/04/2024). On a total return basis, that’s a result of 1,782.41% (something to think about: how might CB stock perform over time?) next one 20 years?). (These figures were calculated using the Dividend Channel DRIP Returns Calculator.)

In addition to the share price change, another part of CB’s total return over the past twenty years has been Chubb Ltd’s payment of $42.35/share in dividends to shareholders. Automatically reinvesting dividends can be a wonderful way to boost returns, and for the above calculations we assume dividends are reinvested in additional shares. (The closing price on the ex-date is used for these calculations).

Based on the most recent annualized dividend rate of 3.64/share, we calculate that CB currently has a yield of approximately 1.37%. Another interesting data point we can explore is return on costs. In other words, we can express the current annualized dividend of 3.64 versus the original purchase price of $21.50 per share. This amounts to a return on costs of 6.37%.

Another great investing quote to think about:
“One of the funny things about the stock market is that every time someone buys, someone else sells, and both think they’re smart.” – Willem Veer