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 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 Exxon Mobil Corp (NYSE: XOM)? Today, we examine the outcome of a ten year investment into the stock back in 2011.

Start date: 12/21/2011


End date: 12/20/2021
Start price/share: $83.12
End price/share: $59.16
Starting shares: 120.31
Ending shares: 181.46
Dividends reinvested/share: $29.89
Total return: 7.35%
Average annual return: 0.71%
Starting investment: $10,000.00
Ending investment: $10,733.54

As shown above, the ten year investment result worked out as follows, with an annualized rate of return of 0.71%. This would have turned a $10K investment made 10 years ago into $10,733.54 today (as of 12/20/2021). On a total return basis, that’s a result of 7.35% (something to think about: how might XOM shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Exxon Mobil Corp paid investors a total of $29.89/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 3.52/share, we calculate that XOM has a current yield of approximately 5.95%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 3.52 against the original $83.12/share purchase price. This works out to a yield on cost of 7.16%.

One more investment quote to leave you with:
“The stock market is a device to transfer money from the impatient to the patient.” — Warren Buffett