“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— Warren Buffett
A long-term investment in Moody’s Corp. demonstrates how compounding can reward patient ownership of a high-quality business. Over the 20-year period from 04/24/2006 through 04/23/2026, a $10,000 investment in NYSE: MCO, with dividends reinvested, grew to $79,990.92. That equates to a total return of 700.40% and an average annual return of 10.95%.
The result matters not simply because the stock appreciated, but because total return came from two reinforcing drivers: sustained share price gains and the incremental compounding created by reinvested dividends. Moody’s is not a high-yield stock, but its long-run outcome shows that modest income can still make a meaningful contribution when paired with durable earnings growth and a strong market position.
Moody’s 20-Year Return at a Glance
| Start date: | 04/24/2006 |
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| End date: | 04/23/2026 | ||||
| Start price/share: | $71.04 | ||||
| End price/share: | $452.35 | ||||
| Starting shares: | 140.77 | ||||
| Ending shares: | 176.94 | ||||
| Dividends reinvested/share: | $31.86 | ||||
| Total return: | 700.40% | ||||
| Average annual return: | 10.95% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $79,990.92 | ||||
The numbers above indicate that a two-decade buy-and-hold investment in Moody’s produced a strong compounded outcome. A $10,000 investment grew to $79,990.92 by 04/23/2026, based on reinvested dividends and historical pricing. [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
What Drove Moody’s Long-Term Return?
Moody’s total return over this period was driven primarily by capital appreciation. The stock price rose from $71.04 to $452.35, reflecting substantial business value creation over time. Dividends added a secondary, but still meaningful, layer of return by increasing the share count from 140.77 to 176.94 through reinvestment.
This pattern is consistent with the economics of the business. Moody’s operates through credit ratings and analytics, areas that benefit from recurring demand, deep market entrenchment, and significant switching costs. Credit markets expand over long periods, and the company’s role in bond issuance and risk analysis has historically supported strong margins and cash generation. Those attributes can be especially powerful when compounded over many years.
How Much Did Dividends Contribute?
Over the past 20 years, Moody’s paid $31.86 per share in dividends, with the analysis assuming automatic reinvestment into additional shares. That matters because reinvestment allows each cash distribution to purchase more stock, which can then earn future dividends and participate in future price appreciation.
For this calculation, the most recent annualized dividend rate is $4.12 per share. Using the recent share price implied by the data above, that corresponds to a current dividend yield of approximately 0.91%. Measured against the original purchase price of $71.04 per share, the current payout represents a yield on cost of about 1.28%.
Key takeaways:
• Starting investment: $10,000
• Ending value after 20 years: $79,990.92
• Total return with dividends reinvested: 700.40%
• Annualized return: 10.95%
• Dividend yield today remains modest, but reinvestment still enhanced long-run compounding
Why This Buy-and-Hold Outcome Is Noteworthy
The Moody’s example illustrates an important distinction in equity investing: outstanding long-term results do not always require a high starting yield. In many cases, the larger determinant of wealth creation is the ability of a business to compound earnings, protect returns on capital, and maintain pricing power over time. Dividends can enhance that process, but they do not have to be the dominant source of return.
It also underscores the value of time horizon. A 20-year holding period spans multiple market cycles, credit disruptions, interest-rate regimes, and periods of recession and recovery. A business that can continue to expand through those conditions often reveals its quality most clearly over long stretches, not short intervals.
Here’s one more investment quote before you go:
“Be fearful when others are greedy; be greedy when others are fearful.” — Warren Buffett
