Photo credit:

“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 decade-long holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Occidental Petroleum Corp (NYSE: OXY)? Today, we examine the outcome of a decade-long investment into the stock back in 2011.

Start date: 01/20/2011


End date: 01/19/2021
Start price/share: $92.36
End price/share: $23.07
Starting shares: 108.27
Ending shares: 163.02
Dividends reinvested/share: $25.18
Total return: -62.39%
Average annual return: -9.31%
Starting investment: $10,000.00
Ending investment: $3,761.50

The above analysis shows the decade-long investment result worked out poorly, with an annualized rate of return of -9.31%. This would have turned a $10K investment made 10 years ago into $3,761.50 today (as of 01/19/2021). On a total return basis, that’s a result of -62.39% (something to think about: how might OXY shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Occidental Petroleum Corp paid investors a total of $25.18/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 .04/share, we calculate that OXY has a current yield of approximately 0.17%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .04 against the original $92.36/share purchase price. This works out to a yield on cost of 0.18%.

One more piece of investment wisdom to leave you with:
“The most important quality for an investor is temperament, not intellect. You need a temperament that neither derives great pleasure from being with the crowd or against the crowd.” — Warren Buffett