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 Exxon Mobil Corp (NYSE: XOM)? Today, we examine the outcome of a five year investment into the stock back in 2018.

Start date: 01/17/2018


End date: 01/13/2023
Start price/share: $88.00
End price/share: $113.15
Starting shares: 113.64
Ending shares: 147.82
Dividends reinvested/share: $17.18
Total return: 67.26%
Average annual return: 10.85%
Starting investment: $10,000.00
Ending investment: $16,722.87

The above analysis shows the five year investment result worked out quite well, with an annualized rate of return of 10.85%. This would have turned a $10K investment made 5 years ago into $16,722.87 today (as of 01/13/2023). On a total return basis, that’s a result of 67.26% (something to think about: how might XOM shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Exxon Mobil Corp paid investors a total of $17.18/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 3.64/share, we calculate that XOM has a current yield of approximately 3.22%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 3.64 against the original $88.00/share purchase price. This works out to a yield on cost of 3.66%.

One more investment quote to leave you with:
“Everyone has the brainpower to make money in stocks. Not everyone has the stomach. If you are susceptible to selling everything in a panic, you ought to avoid stocks and mutual funds altogether.” — Peter Lynch