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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 Warren Buffett investment philosophy calls for a long-term investment horizon, where a five 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 five year investment into the stock back in 2017.

Start date: 01/23/2017


End date: 01/20/2022
Start price/share: $182.90
End price/share: $215.00
Starting shares: 54.67
Ending shares: 59.00
Dividends reinvested/share: $10.63
Total return: 26.84%
Average annual return: 4.88%
Starting investment: $10,000.00
Ending investment: $12,686.74

The above analysis shows the five year investment result worked out as follows, with an annualized rate of return of 4.88%. This would have turned a $10K investment made 5 years ago into $12,686.74 today (as of 01/20/2022). On a total return basis, that’s a result of 26.84% (something to think about: how might PXD shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Pioneer Natural Resources Co paid investors a total of $10.63/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 2.48/share, we calculate that PXD has a current yield of approximately 1.15%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.48 against the original $182.90/share purchase price. This works out to a yield on cost of 0.63%.

Another great investment quote to think about:
“The best way to measure your investing success is not by whether you’re beating the market but by whether you’ve put in place a financial plan and a behavioral discipline that are likely to get you where you want to go.” — Benjamin Graham