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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 decade-long 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 decade-long investment into the stock back in 2012.

Start date: 02/21/2012
$10,000

02/21/2012
$26,031

02/18/2022
End date: 02/18/2022
Start price/share: $43.00
End price/share: $90.90
Starting shares: 232.56
Ending shares: 286.49
Dividends reinvested/share: $10.48
Total return: 160.42%
Average annual return: 10.04%
Starting investment: $10,000.00
Ending investment: $26,031.90

As shown above, the decade-long investment result worked out quite well, with an annualized rate of return of 10.04%. This would have turned a $10K investment made 10 years ago into $26,031.90 today (as of 02/18/2022). On a total return basis, that’s a result of 160.42% (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 $10.48/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 2.20%. 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 $43.00/share purchase price. This works out to a yield on cost of 5.12%.

One more investment quote to leave you with:
“The individual investor should act consistently as an investor and not as a speculator.” — Benjamin Graham