“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 two-decade 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 two-decade investment into the stock back in 2004.
| Start date: | 12/13/2004 |
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| End date: | 12/11/2024 | ||||
| Start price/share: | $19.42 | ||||
| End price/share: | $29.20 | ||||
| Starting shares: | 514.93 | ||||
| Ending shares: | 690.67 | ||||
| Dividends reinvested/share: | $9.74 | ||||
| Total return: | 101.68% | ||||
| Average annual return: | 3.57% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $20,174.59 | ||||
As shown above, the two-decade investment result worked out as follows, with an annualized rate of return of 3.57%. This would have turned a $10K investment made 20 years ago into $20,174.59 today (as of 12/11/2024). On a total return basis, that’s a result of 101.68% (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 $9.74/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 2.33%. 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 $19.42/share purchase price. This works out to a yield on cost of 12.00%.
Here’s one more great investment quote before you go:
“He who earns and does not invest will have to work for the rest of his life.” — Debasish Mridha
