Photo credit:

“I buy on the assumption that they could close the market the next day and not reopen it for five years.”

— Warren Buffett

The Warren Buffett investment philosophy calls for a long-term investment horizon, where a five year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Schlumberger Ltd (NYSE: SLB)? Today, we examine the outcome of a five year investment into the stock back in 2015.

Start date: 08/18/2015


End date: 08/17/2020
Start price/share: $83.15
End price/share: $20.01
Starting shares: 120.26
Ending shares: 143.61
Dividends reinvested/share: $9.62
Total return: -71.26%
Average annual return: -22.06%
Starting investment: $10,000.00
Ending investment: $2,874.12

The above analysis shows the five year investment result worked out poorly, with an annualized rate of return of -22.06%. This would have turned a $10K investment made 5 years ago into $2,874.12 today (as of 08/17/2020). On a total return basis, that’s a result of -71.26% (something to think about: how might SLB shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Schlumberger Ltd paid investors a total of $9.62/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 .5/share, we calculate that SLB has a current yield of approximately 2.50%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .5 against the original $83.15/share purchase price. This works out to a yield on cost of 3.01%.

Another great investment quote to think about:
“All the opportunity in the world means nothing if you don’t actually pull the trigger.” — Sam Zell