“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— Warren Buffett
The investment philosophy practiced by Warren Buffett calls for investors to take a long-term horizon when making an investment, such as a ten-year holding period (or even longer), and to reconsider making the investment in the first place if unable to envision holding the stock for at least five years. Applying that lens to the regulated-utility space can be particularly useful, as cash flows and dividends in this sector tend to be more predictable than in many other industries.
Atmos Energy Corp. (NYSE: ATO) is one of the largest fully regulated natural gas-only distributors in the United States, serving more than three million distribution customers across states including Texas, Louisiana, Mississippi, and several others, and operating an extensive pipeline and storage network in its Mid-Tex and pipeline and storage segments. Regulated utilities such as Atmos typically earn returns on equity that are set by state and federal regulators, and they often target steady, mid-single- to high-single-digit earnings and dividend growth over time.
Today, we look at how a long-term, buy-and-hold strategy would have worked for investors who purchased Atmos Energy Corp. in 2016 and held through to early 2026, with dividends reinvested.
| Start date: | 03/09/2016 |
|
|||
| End date: | 03/06/2026 | ||||
| Start price/share: | $70.91 | ||||
| End price/share: | $185.04 | ||||
| Starting shares: | 141.02 | ||||
| Ending shares: | 177.28 | ||||
| Dividends reinvested/share: | $25.18 | ||||
| Total return: | 228.04% | ||||
| Average annual return: | 12.62% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $32,810.57 | ||||
The above analysis shows that the ten-year investment result worked out quite well, with an annualized rate of return of 12.62%. This would have turned a $10K investment made 10 years ago into $32,810.57 today (as of 03/06/2026). On a total return basis, that is a result of 228.04%. For context, that level of performance is broadly in line with the long-run historical returns of U.S. equities, but it comes from a regulated utility that many investors view primarily as a defensive, income-oriented holding rather than a high-growth stock.
[These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Atmos Energy Corp. paid investors a total of $25.18/share in dividends over the 10-year holding period, marking a second component of 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). Reinvestment increased the share count from 141.02 to 177.28 over the period, so that by 2026 the investor was collecting dividends on roughly 26% more shares than at the start, magnifying the income stream.
Atmos has also built a track record of consistent dividend growth. The company is a constituent of the S&P MidCap 400 index and is often grouped with so-called “dividend growth” utilities, having raised its dividend annually for more than three decades, supported by ongoing capital investment in its regulated infrastructure, relatively stable credit metrics, and allowed returns set by state regulators. For income-focused investors, that combination of a growing payout and regulated cash flows can be an important part of a diversified portfolio.
Based upon the most recent annualized dividend rate of 4/share, we calculate that ATO has a current yield of approximately 2.16%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 4 against the original $70.91/share purchase price. This works out to a yield on cost of 3.05%. In practice, many long-term utility investors ultimately aim to own shares where the yield on their original capital meaningfully exceeds prevailing market yields, providing a rising income stream relative to their initial outlay.
Of course, past performance does not guarantee future results. Future returns for Atmos Energy Corp. will depend on factors including the path of interest rates (which can influence valuation multiples for utilities), regulatory decisions on allowed returns and rate base recovery, execution on large capital expenditure programs, and evolving policy and customer expectations around the role of natural gas in the broader energy-transition landscape.
One more investment quote to leave you with:
“October is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” — Mark Twain
