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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 National Oilwell Varco Inc (NYSE: NOV)? Today, we examine the outcome of a ten year investment into the stock back in 2010.

Start date: 05/17/2010


End date: 05/14/2020
Start price/share: $35.31
End price/share: $11.67
Starting shares: 283.21
Ending shares: 326.03
Dividends reinvested/share: $6.66
Total return: -61.95%
Average annual return: -9.21%
Starting investment: $10,000.00
Ending investment: $3,805.22

As shown above, the ten year investment result worked out poorly, with an annualized rate of return of -9.21%. This would have turned a $10K investment made 10 years ago into $3,805.22 today (as of 05/14/2020). On a total return basis, that’s a result of -61.95% (something to think about: how might NOV shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that National Oilwell Varco Inc paid investors a total of $6.66/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 .2/share, we calculate that NOV has a current yield of approximately 1.71%. 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 $35.31/share purchase price. This works out to a yield on cost of 4.84%.

Here’s one more great investment quote before you go:
“Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble.” — Warren Buffett