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“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”

— Warren Buffett

The Warren Buffett investment philosophy calls for a long-term investment horizon, where a ten year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Pioneer Natural Resources Co (NYSE: PXD)? Today, we examine the outcome of a ten year investment into the stock back in 2010.

Start date: 08/13/2010


End date: 08/12/2020
Start price/share: $56.37
End price/share: $110.50
Starting shares: 177.40
Ending shares: 182.67
Dividends reinvested/share: $3.22
Total return: 101.85%
Average annual return: 7.27%
Starting investment: $10,000.00
Ending investment: $20,181.33

As shown above, the ten year investment result worked out well, with an annualized rate of return of 7.27%. This would have turned a $10K investment made 10 years ago into $20,181.33 today (as of 08/12/2020). On a total return basis, that’s a result of 101.85% (something to think about: how might PXD shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Pioneer Natural Resources Co paid investors a total of $3.22/share in dividends over the 10 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 2.2/share, we calculate that PXD has a current yield of approximately 1.99%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.2 against the original $56.37/share purchase price. This works out to a yield on cost of 3.53%.

Here’s one more great investment quote before you go:
“Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market.” — Warren Buffett