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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 Halliburton Company (NYSE: HAL)? Today, we examine the outcome of a ten year investment into the stock back in 2011.

Start date: 12/20/2011


End date: 12/17/2021
Start price/share: $33.21
End price/share: $22.11
Starting shares: 301.11
Ending shares: 354.49
Dividends reinvested/share: $5.61
Total return: -21.62%
Average annual return: -2.41%
Starting investment: $10,000.00
Ending investment: $7,835.26

As shown above, the ten year investment result worked out poorly, with an annualized rate of return of -2.41%. This would have turned a $10K investment made 10 years ago into $7,835.26 today (as of 12/17/2021). On a total return basis, that’s a result of -21.62% (something to think about: how might HAL shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Halliburton Company paid investors a total of $5.61/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 .18/share, we calculate that HAL has a current yield of approximately 0.81%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .18 against the original $33.21/share purchase price. This works out to a yield on cost of 2.44%.

One more piece of investment wisdom to leave you with:
“There’s a virtuous cycle when people have to defend challenges to their ideas. Any gaps in thinking or analysis become clear pretty quickly when smart people ask good, logical questions.” — Joel Greenblatt