“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 2011.
|Average annual return:||6.52%|
As shown above, the ten year investment result worked out well, with an annualized rate of return of 6.52%. This would have turned a $10K investment made 10 years ago into $18,813.17 today (as of 06/28/2021). On a total return basis, that’s a result of 88.21% (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 $4.80/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 2.24/share, we calculate that PXD has a current yield of approximately 1.40%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.24 against the original $88.87/share purchase price. This works out to a yield on cost of 1.58%.
More investment wisdom to ponder:
“The stock market is a device to transfer money from the impatient to the patient.” — Warren Buffett