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“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”

— Warren Buffett

The Warren Buffett investment philosophy calls for a long-term investment horizon, where a two-decade holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into APA Corp (NASD: APA)? Today, we examine the outcome of a two-decade investment into the stock back in 2002.

Start date: 04/04/2002


End date: 04/01/2022
Start price/share: $26.68
End price/share: $42.22
Starting shares: 374.81
Ending shares: 472.98
Dividends reinvested/share: $12.41
Total return: 99.69%
Average annual return: 3.52%
Starting investment: $10,000.00
Ending investment: $19,976.82

As we can see, the two-decade investment result worked out as follows, with an annualized rate of return of 3.52%. This would have turned a $10K investment made 20 years ago into $19,976.82 today (as of 04/01/2022). On a total return basis, that’s a result of 99.69% (something to think about: how might APA shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that APA Corp paid investors a total of $12.41/share in dividends over the 20 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 .5/share, we calculate that APA has a current yield of approximately 1.18%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .5 against the original $26.68/share purchase price. This works out to a yield on cost of 4.42%.

More investment wisdom to ponder:
“I’d like to live as a poor man with lots of money.” — Pablo Picasso