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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 ten year 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 ConocoPhillips (NYSE: COP) may have been pondering this very question and thinking about their potential investment result over a full ten year time horizon. Here’s how that would have worked out.

Start date: 09/17/2012


End date: 09/15/2022
Start price/share: $58.30
End price/share: $115.56
Starting shares: 171.53
Ending shares: 237.71
Dividends reinvested/share: $19.72
Total return: 174.69%
Average annual return: 10.63%
Starting investment: $10,000.00
Ending investment: $27,461.81

As shown above, the ten year investment result worked out quite well, with an annualized rate of return of 10.63%. This would have turned a $10K investment made 10 years ago into $27,461.81 today (as of 09/15/2022). On a total return basis, that’s a result of 174.69% (something to think about: how might COP shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that ConocoPhillips paid investors a total of $19.72/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 1.84/share, we calculate that COP has a current yield of approximately 1.59%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.84 against the original $58.30/share purchase price. This works out to a yield on cost of 2.73%.

One more investment quote to leave you with:
“The stock market is the story of cycles and of the human behavior that is responsible for overreactions in both directions.” — Seth Klarman