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“I buy on the assumption that they could close the market the next day and not reopen it for five years.”

— Warren Buffett

The Warren Buffett investment philosophy calls for a long-term investment horizon, where a five year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Devon Energy Corp. (NYSE: DVN)? Today, we examine the outcome of a five year investment into the stock back in 2017.

Start date: 06/16/2017


End date: 06/15/2022
Start price/share: $31.76
End price/share: $68.46
Starting shares: 314.86
Ending shares: 377.59
Dividends reinvested/share: $5.69
Total return: 158.50%
Average annual return: 20.92%
Starting investment: $10,000.00
Ending investment: $25,851.79

As shown above, the five year investment result worked out exceptionally well, with an annualized rate of return of 20.92%. This would have turned a $10K investment made 5 years ago into $25,851.79 today (as of 06/15/2022). On a total return basis, that’s a result of 158.50% (something to think about: how might DVN shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Devon Energy Corp. paid investors a total of $5.69/share in dividends over the 5 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 5.08/share, we calculate that DVN has a current yield of approximately 7.42%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 5.08 against the original $31.76/share purchase price. This works out to a yield on cost of 23.36%.

More investment wisdom to ponder:
“The right time for a company to finance its growth is not when it needs capital, but rather when the market is most receptive to providing capital.” — Michael Milken