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“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— Warren Buffett
One of the most important lessons investors can draw from Warren Buffett is the way he frames time horizon. Once an investor commits capital to a stock, the temptation is to monitor every tick — daily and even intraday moves that, in isolation, convey little about long-term value creation. Volatility can easily distract from fundamentals, even when an underlying business is steadily compounding earnings and dividends.
Eversource Energy
(NYSE: ES), a regulated utility serving New England, offers a useful case study in the power of patience, particularly when dividends are reinvested. Below, we examine the result of a two-decade holding period for an investor who purchased ES in 2006, reinvested all dividends, and simply held through to 2026, ignoring the market’s short-term swings.
| Start date: | 03/27/2006 |
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| End date: | 03/25/2026 | ||||
| Start price/share: | $20.01 | ||||
| End price/share: | $67.04 | ||||
| Starting shares: | 499.75 | ||||
| Ending shares: | 992.44 | ||||
| Dividends reinvested/share: | $35.70 | ||||
| Total return: | 565.34% | ||||
| Average annual return: | 9.94% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $66,579.44 | ||||
As shown above, the two-decade investment result worked out well, with an annualized rate of return of 9.94%. That would have turned a $10,000 investment made 20 years ago into $66,579.44 as of 03/25/2026. On a total return basis, that is 565.34%, assuming dividends were fully reinvested. For context, this period spans multiple market regimes — including the 2008‑2009 financial crisis, a long post-crisis bull market, the 2020 pandemic shock, and ensuing interest-rate volatility — underscoring the role of regulated utilities as potential long-term compounders in a diversified portfolio.
It is important to distinguish between price return and total return. Over this holding period, ES’s share price increased from $20.01 to $67.04, but a significant share of the overall result came from dividends. The total number of shares owned nearly doubled, from 499.75 to 992.44, purely through the reinvestment of distributions.
These figures were computed using the
Dividend Channel
DRIP Returns Calculator.
The Power of Reinvested Dividends
Always an important consideration with a dividend‑paying company is whether an investor should reinvest dividends or take them in cash. Over the past 20 years, Eversource Energy has paid $35.70 per share in dividends. For the above analysis, we assume that the investor reinvests dividends into new shares of stock; for the calculations, the reinvestment is performed using the closing price on the ex‑dividend date for each distribution.
This reinvestment policy is what drove the share count from 499.75 to 992.44, magnifying the impact of subsequent dividend increases. Each additional share purchased via reinvestment becomes eligible for future dividends, creating a compounding effect over time. In sectors such as utilities, where payout ratios and dividend visibility are typically higher than in more cyclical industries, this compounding can represent a material share of total return.
Current Yield Versus Yield on Cost
Based upon the most recent annualized dividend rate of $3.15 per share, we calculate that
ES
has a current yield of approximately 4.70%. Another useful datapoint is “yield on cost” — in other words, expressing the current annualized dividend of $3.15 against the original $20.01 per share purchase price. This works out to a yield on cost of 23.49%.
Yield on cost is often cited by income‑oriented investors as a way to frame how much cash flow the original capital now produces. While it is not a valuation metric in itself — current yield, payout ratio, and earnings power are more relevant for assessing value today — it does highlight how a growing dividend stream can materially enhance the attractiveness of a long‑held position.
Eversource Energy in a Long-Term Portfolio
Eversource Energy operates electric, gas, and water utilities across several New England states under a regulated rate structure. Over long horizons, regulated utilities tend to exhibit relatively stable cash flows, driven by allowed returns on rate base and ongoing capital investment in networks and infrastructure. This has historically supported a combination of:
- Moderate but steady earnings growth tied to rate base expansion.
- Regular dividend payments, with a track record of periodic increases.
- Lower volatility than the broader equity market in many macro environments.
Over the 2006‑2026 period examined, ES investors endured episodes of market stress and interest‑rate cycles. Nevertheless, a buy‑and‑hold approach with dividend reinvestment would have delivered a near 10% annualized total return. That outcome is broadly consistent with what many investors seek from core defensive holdings: mid‑single to high‑single digit expected returns, with a substantial portion derived from income.
Looking ahead, the same structural features that have supported ES returns historically — regulated frameworks, ongoing grid investment, and increasing capital needs associated with electrification and renewable integration — are likely to remain key drivers, although future returns will also depend on valuation, regulatory decisions, and interest‑rate levels.
Framing the Next 20 Years
The backward‑looking analysis above is not a forecast, but it does highlight a few principles that long‑term investors may find instructive:
- Time in the market: Staying invested through multiple cycles allowed the compounding of both price appreciation and dividends.
- Role of dividends: In a defensive sector like utilities, dividends and their reinvestment are central to long-term return generation.
- Behavioral discipline: Ignoring interim volatility and maintaining a focus on fundamentals can be critical to realizing full-cycle returns.
For investors evaluating ES or similar regulated utilities today, the key questions over the coming two decades will likely center on rate structures, capital expenditure requirements, the pace of the energy transition, and the balance between dividend growth and balance-sheet strength.
How ES shares might perform over the next 20 years will depend on those variables and on starting valuation from here. Nonetheless, the 2006‑2026 case study underscores that, under the right conditions, a stable, dividend‑paying utility can play a meaningful role in compounding wealth over long horizons.
More investment wisdom to ponder:
“Money is better than poverty, if only for financial reasons.” — Woody Allen
