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

— Warren Buffett

The above quote from Warren Buffett is timeless, and brings into focus the choice about time horizon that any investor should think about before buying a stock they are considering. Behind every stock is an actual business; what will that business look like over a twenty year period?

Today, let’s look backwards in time to 2003, and take a look at what happened to investors who asked that very question about ConocoPhillips (NYSE: COP), by taking a look at the investment outcome over a twenty year holding period.

Start date: 05/19/2003


End date: 05/17/2023
Start price/share: $19.73
End price/share: $100.71
Starting shares: 506.84
Ending shares: 969.45
Dividends reinvested/share: $36.55
Total return: 876.34%
Average annual return: 12.06%
Starting investment: $10,000.00
Ending investment: $97,593.03

As we can see, the twenty year investment result worked out quite well, with an annualized rate of return of 12.06%. This would have turned a $10K investment made 20 years ago into $97,593.03 today (as of 05/17/2023). On a total return basis, that’s a result of 876.34% (something to think about: how might COP shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that ConocoPhillips paid investors a total of $36.55/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 2.04/share, we calculate that COP has a current yield of approximately 2.03%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 2.04 against the original $19.73/share purchase price. This works out to a yield on cost of 10.29%.

One more investment quote to leave you with:
“Successful investing is anticipating the anticipations of others.” — John Maynard Keynes