“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 ten year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into ONEOK Inc (NYSE: OKE)? Today, we examine the outcome of a ten year investment into the stock back in 2012.
| Start date: | 04/23/2012 |
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| End date: | 04/20/2022 | ||||
| Start price/share: | $35.97 | ||||
| End price/share: | $73.62 | ||||
| Starting shares: | 278.01 | ||||
| Ending shares: | 490.84 | ||||
| Dividends reinvested/share: | $27.07 | ||||
| Total return: | 261.36% | ||||
| Average annual return: | 13.71% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $36,127.15 | ||||
The above analysis shows the ten year investment result worked out quite well, with an annualized rate of return of 13.71%. This would have turned a $10K investment made 10 years ago into $36,127.15 today (as of 04/20/2022). On a total return basis, that’s a result of 261.36% (something to think about: how might OKE shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that ONEOK Inc paid investors a total of $27.07/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 3.74/share, we calculate that OKE has a current yield of approximately 5.08%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 3.74 against the original $35.97/share purchase price. This works out to a yield on cost of 14.12%.
More investment wisdom to ponder:
“We don’t have to be smarter than the rest. We have to be more disciplined than the rest.” — Warren Buffett
