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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 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 five year period?

Today, let’s look backwards in time to 2019, and take a look at what happened to investors who asked that very question about Kinder Morgan Inc. (NYSE: KMI), by taking a look at the investment outcome over a five year holding period.

Start date: 06/17/2019


End date: 06/14/2024
Start price/share: $20.52
End price/share: $19.59
Starting shares: 487.33
Ending shares: 670.00
Dividends reinvested/share: $5.41
Total return: 31.25%
Average annual return: 5.59%
Starting investment: $10,000.00
Ending investment: $13,123.49

As we can see, the five year investment result worked out well, with an annualized rate of return of 5.59%. This would have turned a $10K investment made 5 years ago into $13,123.49 today (as of 06/14/2024). On a total return basis, that’s a result of 31.25% (something to think about: how might KMI shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Kinder Morgan Inc. paid investors a total of $5.41/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 1.15/share, we calculate that KMI has a current yield of approximately 5.87%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.15 against the original $20.52/share purchase price. This works out to a yield on cost of 28.61%.

One more piece of investment wisdom to leave you with:
“Every day that you’re not selling an asset in your portfolio, you’re choosing to buy it.” — Sam Zell