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“I buy on the assumption that they could close the market the next day and not reopen it for five years.”

— Warren Buffett

The above quote from Warren Buffett is timeless, and brings into focus the choice about time horizon that any investor should think about before buying a stock they are considering. Behind every stock is an actual business; what will that business look like over a five year period?

Today, let’s look backwards in time to 2017, and take a look at what happened to investors who asked that very question about Devon Energy Corp. (NYSE: DVN), by taking a look at the investment outcome over a five year holding period.

Start date: 01/27/2017


End date: 01/26/2022
Start price/share: $46.64
End price/share: $51.79
Starting shares: 214.41
Ending shares: 249.36
Dividends reinvested/share: $3.54
Total return: 29.14%
Average annual return: 5.25%
Starting investment: $10,000.00
Ending investment: $12,915.48

As we can see, the five year investment result worked out well, with an annualized rate of return of 5.25%. This would have turned a $10K investment made 5 years ago into $12,915.48 today (as of 01/26/2022). On a total return basis, that’s a result of 29.14% (something to think about: how might DVN shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Devon Energy Corp. paid investors a total of $3.54/share in dividends over the 5 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 DVN has a current yield of approximately 0.85%. 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 $46.64/share purchase price. This works out to a yield on cost of 1.82%.

Here’s one more great investment quote before you go:
“I rarely think the market is right. I believe non-dividend stocks aren’t much more than baseball cards. They are worth what you can convince someone to pay for it.” — Mark Cuban