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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 Kinder Morgan Inc. (NYSE: KMI)? Today, we examine the outcome of a decade-long investment into the stock back in 2012.

Start date: 05/14/2012


End date: 05/11/2022
Start price/share: $33.55
End price/share: $18.52
Starting shares: 298.06
Ending shares: 478.02
Dividends reinvested/share: $11.23
Total return: -11.47%
Average annual return: -1.21%
Starting investment: $10,000.00
Ending investment: $8,854.10

The above analysis shows the decade-long investment result worked out poorly, with an annualized rate of return of -1.21%. This would have turned a $10K investment made 10 years ago into $8,854.10 today (as of 05/11/2022). On a total return basis, that’s a result of -11.47% (something to think about: how might KMI shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Kinder Morgan Inc. paid investors a total of $11.23/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 1.11/share, we calculate that KMI has a current yield of approximately 5.99%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.11 against the original $33.55/share purchase price. This works out to a yield on cost of 17.85%.

Another great investment quote to think about:
“I rarely think the market is right. I believe non-dividend stocks aren’t much more than baseball cards. They are worth what you can convince someone to pay for it.” — Mark Cuban