“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— 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 CenterPoint Energy, Inc (NYSE: CNP)? Today, we examine the outcome of a twenty year investment into the stock back in 2006.
| Start date: | 01/05/2006 |
|
|||
| End date: | 01/02/2026 | ||||
| Start price/share: | $13.01 | ||||
| End price/share: | $38.73 | ||||
| Starting shares: | 768.64 | ||||
| Ending shares: | 1,695.92 | ||||
| Dividends reinvested/share: | $16.84 | ||||
| Total return: | 556.83% | ||||
| Average annual return: | 9.87% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $65,736.49 | ||||
As shown above, the twenty year investment result worked out well, with an annualized rate of return of 9.87%. This would have turned a $10K investment made 20 years ago into $65,736.49 today (as of 01/02/2026). On a total return basis, that’s a result of 556.83% (something to think about: how might CNP shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that CenterPoint Energy, Inc paid investors a total of $16.84/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 .92/share, we calculate that CNP has a current yield of approximately 2.38%. 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 $13.01/share purchase price. This works out to a yield on cost of 18.29%.
One more investment quote to leave you with:
“Searching for companies is like looking for grubs under rocks: if you turn over 10 rocks you’ll likely find one grub; if you turn over 20 rocks you’ll find two.” — Peter Lynch
