Photo credit:

“Someone’s sitting in the shade today because someone planted a tree a long time ago.”

— 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: 07/08/2002


End date: 07/06/2022
Start price/share: $27.05
End price/share: $32.01
Starting shares: 369.69
Ending shares: 467.07
Dividends reinvested/share: $12.49
Total return: 49.51%
Average annual return: 2.03%
Starting investment: $10,000.00
Ending investment: $14,949.60

The above analysis shows the two-decade investment result worked out as follows, with an annualized rate of return of 2.03%. This would have turned a $10K investment made 20 years ago into $14,949.60 today (as of 07/06/2022). On a total return basis, that’s a result of 49.51% (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 $12.49/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 1.56%. 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 $27.05/share purchase price. This works out to a yield on cost of 5.77%.

One more piece of investment wisdom to leave you with:
“You don’t need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ.” — Warren Buffett