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“Someone’s sitting in the shade today because someone planted a tree a long time ago.”

— Warren Buffett

The Warren Buffett investment philosophy calls for a long-term investment horizon, where a twenty year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Halliburton Company (NYSE: HAL)? Today, we examine the outcome of a twenty year investment into the stock back in 2004.

Start date: 10/25/2004
$10,000

10/25/2004
  $21,668

10/24/2024
End date: 10/24/2024
Start price/share: $17.18
End price/share: $27.85
Starting shares: 582.07
Ending shares: 778.78
Dividends reinvested/share: $9.64
Total return: 116.89%
Average annual return: 3.94%
Starting investment: $10,000.00
Ending investment: $21,668.97

As we can see, the twenty year investment result worked out as follows, with an annualized rate of return of 3.94%. This would have turned a $10K investment made 20 years ago into $21,668.97 today (as of 10/24/2024). On a total return basis, that’s a result of 116.89% (something to think about: how might HAL shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that Halliburton Company paid investors a total of $9.64/share in dividends over the 20 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 .68/share, we calculate that HAL has a current yield of approximately 2.44%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .68 against the original $17.18/share purchase price. This works out to a yield on cost of 14.20%.

One more investment quote to leave you with:
“Nearly every time I strayed from the herd, I’ve made a lot of money. Wandering away from the action is the way to find the new action.” — Jim Rogers