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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

The Warren Buffett investment philosophy calls for a long-term investment horizon, where a decade-long 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 decade-long investment into the stock back in 2014.

Start date: 01/10/2014


End date: 01/09/2024
Start price/share: $86.20
End price/share: $32.97
Starting shares: 116.01
Ending shares: 140.54
Dividends reinvested/share: $8.04
Total return: -53.66%
Average annual return: -7.40%
Starting investment: $10,000.00
Ending investment: $4,634.67

As we can see, the decade-long investment result worked out poorly, with an annualized rate of return of -7.40%. This would have turned a $10K investment made 10 years ago into $4,634.67 today (as of 01/09/2024). On a total return basis, that’s a result of -53.66% (something to think about: how might APA shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Beyond share price change, another component of APA’s total return these past 10 years has been the payment by APA Corp of $8.04/share in dividends to shareholders. Automatic reinvestment of dividends can be a wonderful way to compound returns, and for the above calculations we presume that dividends are reinvested into additional shares of stock. (For the purpose of these calcuations, the closing price on ex-date is used).

Based upon the most recent annualized dividend rate of 1/share, we calculate that APA has a current yield of approximately 3.03%. 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 $86.20/share purchase price. This works out to a yield on cost of 3.52%.

One more investment quote to leave you with:
“While some might mistakenly consider value investing a mechanical tool for identifying bargains, it is actually a comprehensive investment philosophy that emphasizes the need to perform in-depth fundamental analysis, pursue long-term investment results, limit risk, and resist crowd psychology.” — Seth Klarman