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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 ten year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Phillips 66 (NYSE: PSX)? Today, we examine the outcome of a ten year investment into the stock back in 2014.

Start date: 06/24/2014


End date: 06/21/2024
Start price/share: $84.94
End price/share: $138.09
Starting shares: 117.73
Ending shares: 168.91
Dividends reinvested/share: $32.41
Total return: 133.25%
Average annual return: 8.84%
Starting investment: $10,000.00
Ending investment: $23,328.42

As we can see, the ten year investment result worked out well, with an annualized rate of return of 8.84%. This would have turned a $10K investment made 10 years ago into $23,328.42 today (as of 06/21/2024). On a total return basis, that’s a result of 133.25% (something to think about: how might PSX shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Phillips 66 paid investors a total of $32.41/share in dividends over the 10 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 4.6/share, we calculate that PSX has a current yield of approximately 3.33%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 4.6 against the original $84.94/share purchase price. This works out to a yield on cost of 3.92%.

One more investment quote to leave you with:
“A risk-reward ratio is important, but so is an aggravation-satisfaction ratio.” — Muriel Siebert