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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 NetApp, Inc. (NASD: NTAP)? Today, we examine the outcome of a five year investment into the stock back in 2017.

Start date: 09/21/2017


End date: 09/20/2022
Start price/share: $41.86
End price/share: $66.30
Starting shares: 238.89
Ending shares: 273.83
Dividends reinvested/share: $8.54
Total return: 81.55%
Average annual return: 12.67%
Starting investment: $10,000.00
Ending investment: $18,156.89

The above analysis shows the five year investment result worked out quite well, with an annualized rate of return of 12.67%. This would have turned a $10K investment made 5 years ago into $18,156.89 today (as of 09/20/2022). On a total return basis, that’s a result of 81.55% (something to think about: how might NTAP shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that NetApp, Inc. paid investors a total of $8.54/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 2/share, we calculate that NTAP has a current yield of approximately 3.02%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2 against the original $41.86/share purchase price. This works out to a yield on cost of 7.21%.

One more investment quote to leave you with:
“Most investors want to do today what they should have done yesterday.” — Larry Summers