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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 2014.

Start date: 05/09/2014


End date: 05/08/2024
Start price/share: $100.22
End price/share: $47.86
Starting shares: 99.78
Ending shares: 130.79
Dividends reinvested/share: $14.50
Total return: -37.40%
Average annual return: -4.57%
Starting investment: $10,000.00
Ending investment: $6,262.36

As shown above, the decade-long investment result worked out poorly, with an annualized rate of return of -4.57%. This would have turned a $10K investment made 10 years ago into $6,262.36 today (as of 05/08/2024). On a total return basis, that’s a result of -37.40% (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 $14.50/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 1.1/share, we calculate that SLB has a current yield of approximately 2.30%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.1 against the original $100.22/share purchase price. This works out to a yield on cost of 2.29%.

More investment wisdom to ponder:
“You get recessions, you have stock market declines. If you don’t understand that’s going to happen, then you’re not ready, you won’t do well in the markets.” — Peter Lynch