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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 Marathon Oil Corp. (NYSE: MRO)? Today, we examine the outcome of a ten year investment into the stock back in 2013.

Start date: 07/15/2013


End date: 07/12/2023
Start price/share: $36.57
End price/share: $24.79
Starting shares: 273.45
Ending shares: 322.75
Dividends reinvested/share: $3.44
Total return: -19.99%
Average annual return: -2.21%
Starting investment: $10,000.00
Ending investment: $7,997.81

As we can see, the ten year investment result worked out poorly, with an annualized rate of return of -2.21%. This would have turned a $10K investment made 10 years ago into $7,997.81 today (as of 07/12/2023). On a total return basis, that’s a result of -19.99% (something to think about: how might MRO shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Marathon Oil Corp. paid investors a total of $3.44/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 .4/share, we calculate that MRO has a current yield of approximately 1.62%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .4 against the original $36.57/share purchase price. This works out to a yield on cost of 4.43%.

Another great investment quote to think about:
“The individual investor should act consistently as an investor and not as a speculator.” — Benjamin Graham