“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 Cabot Oil & Gas Corp. (NYSE: COG)? Today, we examine the outcome of a ten year investment into the stock back in 2011.
| Start date: | 09/29/2011 |
|
|||
| End date: | 09/28/2021 | ||||
| Start price/share: | $16.04 | ||||
| End price/share: | $21.82 | ||||
| Starting shares: | 623.44 | ||||
| Ending shares: | 680.68 | ||||
| Dividends reinvested/share: | $1.84 | ||||
| Total return: | 48.52% | ||||
| Average annual return: | 4.03% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $14,848.41 | ||||
The above analysis shows the ten year investment result worked out as follows, with an annualized rate of return of 4.03%. This would have turned a $10K investment made 10 years ago into $14,848.41 today (as of 09/28/2021). On a total return basis, that’s a result of 48.52% (something to think about: how might COG shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Cabot Oil & Gas Corp. paid investors a total of $1.84/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 .44/share, we calculate that COG has a current yield of approximately 2.02%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .44 against the original $16.04/share purchase price. This works out to a yield on cost of 12.59%.
Here’s one more great investment quote before you go:
“The individual investor should act consistently as an investor and not as a speculator.” — Benjamin Graham
