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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 Freeport-McMoran Copper & Gold (NYSE: FCX)? Today, we examine the outcome of a decade-long investment into the stock back in 2012.

Start date: 02/15/2012
$10,000

02/15/2012
$12,432

02/14/2022
End date: 02/14/2022
Start price/share: $42.40
End price/share: $42.45
Starting shares: 235.85
Ending shares: 292.78
Dividends reinvested/share: $6.10
Total return: 24.29%
Average annual return: 2.20%
Starting investment: $10,000.00
Ending investment: $12,432.57

As shown above, the decade-long investment result worked out as follows, with an annualized rate of return of 2.20%. This would have turned a $10K investment made 10 years ago into $12,432.57 today (as of 02/14/2022). On a total return basis, that’s a result of 24.29% (something to think about: how might FCX shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Freeport-McMoran Copper & Gold paid investors a total of $6.10/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 .3/share, we calculate that FCX has a current yield of approximately 0.71%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .3 against the original $42.40/share purchase price. This works out to a yield on cost of 1.67%.

Here’s one more great investment quote before you go:
“The policy of being too cautious is the greatest risk of all.” — Jawaharlal Nehru