APA 5 Year Performance How 10,000 Turned Into 25,300 With Reinvested Dividends

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— Warren Buffett

Investors can learn a great deal from Warren Buffett, whose quotation above underscores the importance of time horizon and discipline. A long-term orientation forces investors to look past day-to-day volatility and instead ask a more fundamental question: can we envision holding a stock for years — even for a full five-year period — based on its underlying economics rather than short-term market sentiment?

Suppose a buy-and-hold investor was considering an investment in APA Corp (NASD: APA) in early 2021. At that time, APA, an independent exploration and production company with core operations in the United States, Egypt and the North Sea, was emerging from the severe commodity price downturn that began in 2020. The shares were trading at depressed levels, reflecting both weak oil and gas prices and heightened uncertainty about future capital allocation. A long-term investor willing to look through the cycle might reasonably have asked whether APA could be a candidate for a five-year holding period.

Had that investor answered “yes” to a full five-year time horizon and then actually held through the ensuing volatility, here is how that investment would have turned out.

APA 5-Year Return Details
Start date:	03/26/2021	$10,000 03/26/2021   $25,300 03/25/2026
End date:	03/25/2026
Start price/share:	$18.79
End price/share:	$41.32
Starting shares:	532.20
Ending shares:	612.38
Dividends reinvested/share:	$3.99
Total return:	153.03%
Average annual return:	20.40%
Starting investment:	$10,000.00
Ending investment:	$25,300.69

As shown above, the five-year investment result worked out exceptionally well, with an annualized rate of return of 20.40%. That performance figure is calculated on a total-return basis, assuming reinvestment of all dividends. A hypothetical $10,000 investment made five years ago would have grown into $25,300.69 as of 03/25/2026. In aggregate, that represents a total return of 153.03% over the period.

It is worth stressing that this outcome was achieved over a period that included substantial volatility in energy markets. Following the severe downturn in 2020, crude oil prices recovered sharply as global demand normalized and supply discipline improved, benefiting upstream producers such as APA. The company also used this period to reduce leverage and prioritize shareholder returns, including both a base dividend and, at times, variable distributions and share repurchases, which contributed to total-return potential.

Beyond share price appreciation, another key component of APA’s total return over these five years was income. APA Corp paid a cumulative $3.99 per share in dividends to shareholders during the period shown. For purposes of the above calculation, those dividends are assumed to have been automatically reinvested into additional APA shares through a dividend reinvestment plan. That reinvestment caused the share count to rise from 532.20 shares at the start of the period to 612.38 shares at the end — a roughly 15% increase in the number of shares owned, purely from reinvested cash flows. (For these calculations, the closing price on the ex-dividend date is used when determining the number of new shares purchased.)

Reinvestment plays a central role in compounding. When dividends are taken in cash, the shareholder’s income stream may be stable but the underlying share count remains fixed. When dividends are instead reinvested, each distribution buys additional shares, which can in turn generate more dividends, and so on. Over multi-year periods, as in APA’s case above, this compounding can make a material difference to the ending portfolio value.

Based on the most recent annualized dividend rate of $1.00 per share, we calculate that APA currently offers a dividend yield of approximately 2.42% on the recent share price. While that headline yield may appear modest relative to some high-yielding securities, long-term investors often focus on a different metric: “yield on cost.”

Yield on cost compares the current annualized dividend to the original purchase price, rather than to the prevailing market price. Expressing the current $1.00 per share dividend against the original $18.79 per share purchase price yields a yield on cost of 12.88%. In other words, an investor who bought at $18.79 and still holds today is now receiving annual dividend income equal to nearly 13% of the original capital deployed, before considering any potential future dividend growth or changes in payout policy.

Of course, such results are not guaranteed to repeat. APA’s business remains exposed to commodity price cycles, operational risks and shifts in global energy policy, including the ongoing transition toward lower-carbon energy sources. Periods of lower oil and gas prices could pressure cash flow and, by extension, the company’s capacity or willingness to continue current levels of shareholder returns. Moreover, share prices that have already recovered from prior lows may not enjoy the same magnitude of upside that was available to investors entering in early 2021.

Nonetheless, the five-year APA example illustrates several broader principles relevant to income and total-return investing:

• Time horizon matters: allowing an investment thesis to play out over multiple years can capture both fundamental recovery and the power of compounding.
• Total return, not just price, drives outcomes: dividends and their reinvestment can significantly enhance long-term results.
• Entry valuation is important: purchasing cyclically exposed businesses when expectations and valuations are depressed can set up attractive forward returns if fundamentals normalize.
• Yield on cost can become meaningful over time: even a moderate initial yield can grow into a high yield on the original investment when the dividend is sustained or raised.

Whether APA will deliver similar, better, or worse performance over the next five years will depend on a range of factors, including future commodity prices, capital discipline, exploration success, and the company’s ongoing approach to balance sheet management and shareholder distributions. For investors evaluating APA today, it may be instructive to revisit Buffett’s framing: if the market were to close tomorrow and not reopen for another five years, would the underlying economics of APA’s business justify owning the shares through that period?

More investment wisdom to ponder:
“In the long run, we are all dead.” — John Maynard Keynes