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“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”

— Warren Buffett

The Warren Buffett investment philosophy calls for a long-term investment horizon, where a twenty year 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 twenty year investment into the stock back in 2003.

Start date: 07/28/2003


End date: 07/26/2023
Start price/share: $31.51
End price/share: $39.99
Starting shares: 317.36
Ending shares: 409.05
Dividends reinvested/share: $13.37
Total return: 63.58%
Average annual return: 2.49%
Starting investment: $10,000.00
Ending investment: $16,357.53

As shown above, the twenty year investment result worked out as follows, with an annualized rate of return of 2.49%. This would have turned a $10K investment made 20 years ago into $16,357.53 today (as of 07/26/2023). On a total return basis, that’s a result of 63.58% (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 $13.37/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 1/share, we calculate that APA has a current yield of approximately 2.50%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1 against the original $31.51/share purchase price. This works out to a yield on cost of 7.93%.

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