“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 Occidental Petroleum Corp (NYSE: OXY)? Today, we examine the outcome of a two-decade investment into the stock back in 2005.
| Start date: | 03/10/2005 |
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| End date: | 03/07/2025 | ||||
| Start price/share: | $33.78 | ||||
| End price/share: | $47.24 | ||||
| Starting shares: | 296.03 | ||||
| Ending shares: | 509.27 | ||||
| Dividends reinvested/share: | $33.09 | ||||
| Total return: | 140.58% | ||||
| Average annual return: | 4.49% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $24,076.82 | ||||
As we can see, the two-decade investment result worked out as follows, with an annualized rate of return of 4.49%. This would have turned a $10K investment made 20 years ago into $24,076.82 today (as of 03/07/2025). On a total return basis, that’s a result of 140.58% (something to think about: how might OXY shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Occidental Petroleum Corp paid investors a total of $33.09/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 .96/share, we calculate that OXY has a current yield of approximately 2.03%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .96 against the original $33.78/share purchase price. This works out to a yield on cost of 6.01%.
One more piece of investment wisdom to leave you with:
“Games are won by players who focus on the playing field, not by those whose eyes are glued to the scoreboard.” — Warren Buffett
