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“Someone’s sitting in the shade today because someone planted a tree a long time ago.”

— Warren Buffett

The Warren Buffett investment philosophy calls for a long-term investment horizon, where a two-decade holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Freeport-McMoran Copper & Gold (NYSE: FCX)? Today, we examine the outcome of a two-decade investment into the stock back in 2000.

Start date: 05/18/2000


End date: 05/15/2020
Start price/share: $5.50
End price/share: $8.48
Starting shares: 1,818.18
Ending shares: 2,941.04
Dividends reinvested/share: $13.90
Total return: 149.40%
Average annual return: 4.67%
Starting investment: $10,000.00
Ending investment: $24,920.29

The above analysis shows the two-decade investment result worked out as follows, with an annualized rate of return of 4.67%. This would have turned a $10K investment made 20 years ago into $24,920.29 today (as of 05/15/2020). On a total return basis, that’s a result of 149.40% (something to think about: how might FCX shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Freeport-McMoran Copper & Gold paid investors a total of $13.90/share in dividends over the 20 holding period, marking a second component of the total return beyond share price change alone. Much like watering a tree, reinvesting dividends can help an investment to grow over time — for the above calculations we assume dividend reinvestment (and for this exercise the closing price on ex-date is used for the reinvestment of a given dividend).

Based upon the most recent annualized dividend rate of .2/share, we calculate that FCX has a current yield of approximately 2.36%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .2 against the original $5.50/share purchase price. This works out to a yield on cost of 42.91%.

One more piece of investment wisdom to leave you with:
“Far more money has been lost by investors trying to anticipate corrections, than lost in the corrections themselves.” — Peter Lynch