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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 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