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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

This inspiring quote from Warren Buffett teaches us the importance of considering our investment time horizon when approaching any given investment: Could we envision ourselves holding the stock we are considering for many years? Even a decade-long holding period potentially?

For “buy-and-hold” investors taking a long-term view, what’s important isn’t the short-term stock market fluctuations that will inevitably occur, but what happens over the long haul. Looking back 10 years to 2012, investors considering an investment into shares of Freeport-McMoran Copper & Gold (NYSE: FCX) may have been pondering this very question and thinking about their potential investment result over a full decade-long time horizon. Here’s how that would have worked out.

Start date: 04/19/2012


End date: 04/18/2022
Start price/share: $38.03
End price/share: $50.77
Starting shares: 262.95
Ending shares: 324.57
Dividends reinvested/share: $5.94
Total return: 64.79%
Average annual return: 5.12%
Starting investment: $10,000.00
Ending investment: $16,478.32

As we can see, the decade-long investment result worked out well, with an annualized rate of return of 5.12%. This would have turned a $10K investment made 10 years ago into $16,478.32 today (as of 04/18/2022). On a total return basis, that’s a result of 64.79% (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 $5.94/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 0.59%. 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 $38.03/share purchase price. This works out to a yield on cost of 1.55%.

Another great investment quote to think about:
“All intelligent investing is value investing: acquiring more that you are paying for. You must value the business in order to value the stock.” — Charlie Munger