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

— 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 NetApp, Inc. (NASD: NTAP)? Today, we examine the outcome of a twenty year investment into the stock back in 2004.

Start date: 05/14/2004


End date: 05/13/2024
Start price/share: $20.53
End price/share: $108.15
Starting shares: 487.09
Ending shares: 637.93
Dividends reinvested/share: $14.98
Total return: 589.92%
Average annual return: 10.13%
Starting investment: $10,000.00
Ending investment: $68,955.99

As shown above, the twenty year investment result worked out quite well, with an annualized rate of return of 10.13%. This would have turned a $10K investment made 20 years ago into $68,955.99 today (as of 05/13/2024). On a total return basis, that’s a result of 589.92% (something to think about: how might NTAP shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that NetApp, Inc. paid investors a total of $14.98/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/share, we calculate that NTAP has a current yield of approximately 1.85%. 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 $20.53/share purchase price. This works out to a yield on cost of 9.01%.

Another great investment quote to think about:
“If you have more than 120 or 130 I.Q. points, you can afford to give the rest away. You don’t need extraordinary intelligence to succeed as an investor.” — Warren Buffett