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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 NetApp, Inc. (NASD: NTAP)? Today, we examine the outcome of a ten year investment into the stock back in 2011.

Start date: 12/09/2011


End date: 12/08/2021
Start price/share: $38.01
End price/share: $89.81
Starting shares: 263.09
Ending shares: 322.37
Dividends reinvested/share: $9.98
Total return: 189.52%
Average annual return: 11.21%
Starting investment: $10,000.00
Ending investment: $28,952.85

As shown above, the ten year investment result worked out quite well, with an annualized rate of return of 11.21%. This would have turned a $10K investment made 10 years ago into $28,952.85 today (as of 12/08/2021). On a total return basis, that’s a result of 189.52% (something to think about: how might NTAP shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that NetApp, Inc. paid investors a total of $9.98/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/share, we calculate that NTAP has a current yield of approximately 2.23%. 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 $38.01/share purchase price. This works out to a yield on cost of 5.87%.

Another great investment quote to think about:
“The best stock to buy is the one you already own.” — Peter Lynch