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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 Schlumberger Ltd (NYSE: SLB)? Today, we examine the outcome of a five year investment into the stock back in 2018.

Start date: 01/12/2018


End date: 01/11/2023
Start price/share: $77.97
End price/share: $56.32
Starting shares: 128.25
Ending shares: 149.70
Dividends reinvested/share: $6.02
Total return: -15.69%
Average annual return: -3.35%
Starting investment: $10,000.00
Ending investment: $8,433.53

The above analysis shows the five year investment result worked out poorly, with an annualized rate of return of -3.35%. This would have turned a $10K investment made 5 years ago into $8,433.53 today (as of 01/11/2023). On a total return basis, that’s a result of -15.69% (something to think about: how might SLB shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Schlumberger Ltd paid investors a total of $6.02/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 .7/share, we calculate that SLB has a current yield of approximately 1.24%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .7 against the original $77.97/share purchase price. This works out to a yield on cost of 1.59%.

One more piece of investment wisdom to leave you with:
“The older I get, the more I see a straight path where I want to go. If you’re going to hunt elephants, don’t get off the trail for a rabbit.” — T. Boone Pickens