McKesson (MCK -0.32%) is a great stock for long-term holders, but many investors are not familiar with it. This medical distribution giant is anything but flashy, and you're unlikely to see its shares skyrocketing in any given period.

But the truth is that the company has been a strong performer for its shareholders over the last 10 years -- and here's how much money it would have made had you invested in it back then.

You'd be sitting on a decent wad of cash

If you had bought $5,000 worth of McKesson stock at the start of April 2013 and reinvested all of your dividends, your investment would now be worth around $18,700 after growing by 274%. On the other hand, if you'd bought shares of a market-tracking index fund like the SPDR S&P 500 ETF Trust, you'd only have $15,540 with reinvestment. Obviously, that means McKesson investors beat the market handily -- but the less obvious observation is that they beat the market without taking on a lot of additional exposure to risk.

Remember, McKesson is a slow-growing medical distribution giant, not a hotshot growth stock. It makes money by buying massive quantities of the branded pharmaceuticals, medical supplies, surgical tools, and generic drugs that its base of more than 40,000 customers need, selling them, and pocketing a minuscule profit. How massive is massive, you might ask? In 2022, its cost of goods sold (COGS) topped $250 billion, whereas its total revenue was roughly $264 billion. For reference, over the last 10 years its average annual profit margin was only 0.6%, so operating at such a large scale is its norm.

Such a company doesn't present a large risk burden for investors because it's incredibly difficult to replace both for its customers and its suppliers. Without McKesson to bridge the gap, pharmaceutical manufacturers and medical supply manufacturing businesses would need to distribute their products directly to distant customers, with whom they might not have pre-existing relationships. That means they'd need to negotiate about prices of goods many thousands of times, which entails a massive logistical burden even before taking into account the even larger logistical burden of moving items from point A to point B. 

Likewise, its customers get a better deal by buying from McKesson than they would otherwise. Because the company operates at such a large scale, it can drive a hard bargain with its suppliers to buy goods for near their cost of production, then do the same for its customers.

While it's true that McKesson is still vulnerable to things that impact the cost of its operations, like the cost of fuel, it also stands to benefit from other factors outside of its control, like rising demand for specialty drugs, which helped to drive 3% sales growth in its pharmaceuticals segment in its fiscal third quarter of 2023. And because its personnel have a knack for building relationships with its customers and suppliers as a result of management's focus on employee quality and corporate culture, it's hard for competitors to butt in.

The next 10 years could be just as good

As favorable as the last 10 years were for McKesson's shareholders, there's reason to believe that it can repeat the feat in the next 10 years. Management is signaling that the company is going to invest in new strategies like building out its oncology and biopharma services with the aim of driving adjusted earnings per share (EPS) growth of at least 10% annually over the long term.

Given that over the last five years its quarterly diluted earnings per share rose by 205%, its recent track record in that department is quite good. In particular, its oncology medicine and biopharma supply segments are anticipated to be the stars of the growth show, at least for the next few years. Within oncology, building distribution channels for clinical research networks will be the focus.

And assuming the biopharma sector continues to grow as the underlying technologies become more sophisticated and basic medical science continues to advance, that segment choice will likely be a favorable one for shareholders. But investors would do well to be patient if they choose to invest in this stock. The rise in demand for McKesson's distribution services is a slow burn, and it'll likely be necessary to hold onto its shares for a long period to accumulate significant gains from its plodding pace of growth.