“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 Baker Hughes Company (NASD: BKR)? Today, we examine the outcome of a decade-long investment into the stock back in 2015.
| Start date: | 06/09/2015 |
|
|||
| End date: | 06/06/2025 | ||||
| Start price/share: | $64.03 | ||||
| End price/share: | $37.90 | ||||
| Starting shares: | 156.18 | ||||
| Ending shares: | 200.57 | ||||
| Dividends reinvested/share: | $7.40 | ||||
| Total return: | -23.98% | ||||
| Average annual return: | -2.70% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $7,605.51 | ||||
As shown above, the decade-long investment result worked out poorly, with an annualized rate of return of -2.70%. This would have turned a $10K investment made 10 years ago into $7,605.51 today (as of 06/06/2025). On a total return basis, that’s a result of -23.98% (something to think about: how might BKR shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Baker Hughes Company paid investors a total of $7.40/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 .92/share, we calculate that BKR has a current yield of approximately 2.43%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .92 against the original $64.03/share purchase price. This works out to a yield on cost of 3.80%.
Here’s one more great investment quote before you go:
“I think you have to learn that there’s a company behind every stock, and that there’s only one real reason why stocks go up. Companies go from doing poorly to doing well or small companies grow to large companies.” — Peter Lynch
