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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 decade-long 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 decade-long investment into the stock back in 2013.

Start date: 03/22/2013
$10,000

03/22/2013
  $8,475

03/21/2023
End date: 03/21/2023
Start price/share: $74.37
End price/share: $48.28
Starting shares: 134.46
Ending shares: 175.55
Dividends reinvested/share: $14.81
Total return: -15.25%
Average annual return: -1.64%
Starting investment: $10,000.00
Ending investment: $8,475.50

As we can see, the decade-long investment result worked out poorly, with an annualized rate of return of -1.64%. This would have turned a $10K investment made 10 years ago into $8,475.50 today (as of 03/21/2023). On a total return basis, that’s a result of -15.25% (something to think about: how might SLB shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Schlumberger Ltd paid investors a total of $14.81/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 1/share, we calculate that SLB has a current yield of approximately 2.07%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1 against the original $74.37/share purchase price. This works out to a yield on cost of 2.78%.

Here’s one more great investment quote before you go:
“If you can follow only one bit of data, follow the earnings.” — Peter Lynch