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“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 Occidental Petroleum Corp (NYSE: OXY)? Today, we examine the outcome of a five year investment into the stock back in 2016.

Start date: 12/29/2016


End date: 12/28/2021
Start price/share: $71.60
End price/share: $29.48
Starting shares: 139.66
Ending shares: 174.56
Dividends reinvested/share: $10.16
Total return: -48.54%
Average annual return: -12.44%
Starting investment: $10,000.00
Ending investment: $5,146.70

As shown above, the five year investment result worked out poorly, with an annualized rate of return of -12.44%. This would have turned a $10K investment made 5 years ago into $5,146.70 today (as of 12/28/2021). On a total return basis, that’s a result of -48.54% (something to think about: how might OXY shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Occidental Petroleum Corp paid investors a total of $10.16/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 .04/share, we calculate that OXY has a current yield of approximately 0.14%. 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 $71.60/share purchase price. This works out to a yield on cost of 0.20%.

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