Ashok Bought 100 Shares of HDFC in 1980. Here's what Happened Next...

Last month, we asked our readers to share details about One Stock They Have Held for More than 20 years.

We asked to share the story behind the one stock they picked up ages ago, why they picked it, and how they managed to hold on to it for so many years...

We thank all our readers who shared their valuable feedback.

Today, we'll elaborate on one of these amazing stories...

This story is about how Ashok, a 72-year-old father, currently living in Nashik, built an unexpected fortune for his son.

Ashok and his story are an inspiration for us to practice long-term investing.

Here goes...

Back in the early 80s, Ashok took out a loan from mortgage lender Housing Development Finance (HDFC) to build his house.

When the final repayment was due, he received some physical shares of HDFC. The shares were offered by HDFC to Ashok in a discount scheme.

While Ashok does not remember the exact number of shares he received back then, he roughly remembers the number to be about 100.

Later in 1983, Ashok shifted to a new home after putting the old house on rent.

As the years passed, he forgot about the physical shares of HDFC and had no knowledge about them.

Today, HDFC's presence consists of a large network of offices all over India. But this wasn't always the case.

Back in the old days, there was no HDFC office in Nashik, where Ashok currently resides. It was difficult to keep track of his investment.

Back then, share certificates were offered rather than demat shares.

These physical shares of HDFC ended up as pieces of paper that were filed away and forgotten.

Now, HDFC being a consistent dividend paying company, kept rewarding its shareholders by way of dividends. Ashok too, being a shareholder, kept receiving the dividends. The only problem was that the dividend intimation went to Ashok's old house address and not the new one.

Having no recollection of these shares, Ashok remained in the dark for years and the dividend went unclaimed.

On one fine day after many years in 2004 or 2005, the owner of Ashok's old house sent all unclaimed dividend notices to Ashok.

Ashok then came to know about the physical shares of HDFC he received around 25 years ago, for which he now did not even have the share certificates.

His son, having adapted to the online form of demat shares, contacted HDFC and did the due diligence. He completed the process and received shares of HDFC in his demat account.

Ashok also received the unclaimed dividends of the past 6 years (HDFC did not give unclaimed dividend beyond six years).

Even the dividend amount for 6 years was huge back then.

HDFC Dividend in Initial Years

Year End	Dividend (Rs)
1994	28
1995	32
1996	37
1997	45
1998	75
1999	85

Now here's where the story gets more interesting.

Ashok had a rough recollection he had received some 100 shares at the time of loan repayment. But when these shares were dematerialised, the number of shares rose to 1,000.

How?

In 1999, HDFC underwent a stock split wherein it split its face value from Rs 100 per share to Rs 10 per share.

Both Ashok and his son were amazed. Who wouldn't be after what they saw?

They were very happy when looking at the value of these shares.

His son remembers his father advising him to not sell a single share of HDFC and how HDFC has turned out very lucky for them.

Later in 2011, HDFC again split its face value from Rs 10 to Rs 2, which would have resulted in more shares for Ashok.

Just imagine the value of these shares today. Ashok would be receiving massive amount just in dividends!

HDFC is a consistent dividend growth stock. Its past 4 dividends amount to 1,000% of the face value.

HDFC shares still continue to be a passive source of income for Ashok and his son. They don't seem interested in selling any of their shares.

Ashok has now gifted these HDFC shares to his son and currently they are in his son's demat account.

His son still holds all of the shares...and has not sold a single share.

His son started his journey in the stock market and came across Equitymaster.

Soon, he became a Reserve Member. He recollects his father still telling him never to sell HDFC shares.

This is a classic story of buy and hold forever. In Ashok's case, he did not buy those shares but were offered in a discount scheme. He then practiced long term investing and left a fortune for his son.

The key takeaway

Ashok's story inspires many of us to stick with our investments for decades.

Another key takeaway from this story is that even if you invest in a single company with strong fundamentals and stick to it for decades, you stand a chance of raking in millions.

High quality stocks are nothing but high quality businesses. If you own these shares, you can participate in the company's growth via dividends and capital gains.

However, it's difficult for a small investor like you dear reader, to zero in on such investment opportunities. This is because there are more than 5,000 companies listed on the stock exchanges.

To grab the opportunities of generational wealth in the stock market, you need to find these big winners before the rest of the market finds out about them.

How do you do that?

Here's what Co-head of Research at Equitymaster Tanushree Banerjee has to say...

• Start by picking only the stocks of companies that satisfy the following criteria.

• They must be fundamentally great businesses with very solid long-term prospects.
• The future growth visibility should be high.
• The businesses should become obsolete due to technological disruptions.
• They should are run by visionary and passionate promoters.

Tanushree has already identified some stocks which have these qualities. She calls these Forever Stocks.

These are stocks you can buy and hold for years and decades and will make the magic of compounding work in your favour.

Join your wealth creation journey now.

Happy Investing!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...