“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— Warren Buffett
A 10-year holding period can be especially instructive for a regulated utility stock, where total return is often driven by a combination of modest capital appreciation and steady dividend income. For Pinnacle West Capital Corp (NYSE: PNW), the parent company of Arizona Public Service, a $10,000 investment made on 06/23/2016 and held through 06/22/2026 would have grown to $19,638.41 assuming dividends were reinvested. That works out to a 96.33% total return, or an annualized return of 6.98%.
PNW 10-Year Return Details
| Start date: | 06/23/2016 |
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| End date: | 06/22/2026 | ||||
| Start price/share: | $77.31 | ||||
| End price/share: | $102.43 | ||||
| Starting shares: | 129.35 | ||||
| Ending shares: | 191.67 | ||||
| Dividends reinvested/share: | $32.12 | ||||
| Total return: | 96.33% | ||||
| Average annual return: | 6.98% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $19,638.41 | ||||
The share price itself rose from $77.31 to $102.43 over the period, but the larger point is that total return materially exceeded price appreciation alone because of reinvested dividends. Starting with 129.35 shares, the position would have increased to 191.67 shares by the end of the period. That expansion in share count illustrates how dividend reinvestment can compound long-term results even when price gains are moderate.
[These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
What Drove the 10-Year Return in PNW
For utility equities such as Pinnacle West Capital, long-run returns often come from three sources:
- Dividend income: PNW paid a cumulative $32.12 per share over the holding period.
- Dividend reinvestment: Reinvested distributions increased the investor’s share count from 129.35 to 191.67.
- Share price appreciation: The stock advanced from $77.31 to $102.43.
That mix is typical of the sector. Regulated electric utilities generally do not rely on rapid revenue growth to generate shareholder returns. Instead, they tend to offer a more income-oriented profile, with earnings and cash flow shaped by rate-base growth, regulatory outcomes, capital spending, and financing costs.
Dividend Reinvestment and Compounding
Pinnacle West Capital paid investors a total of $32.12 per share in dividends during the 10-year holding period. When those cash distributions are reinvested, each payment buys incremental shares, which then become eligible for future dividends as well. Over long periods, that compounding effect can account for a substantial portion of total return.
In this case, dividend reinvestment added more than 62 shares to the original position. That is a meaningful increase in ownership without any additional out-of-pocket capital beyond the initial $10,000 investment.
Current Yield and Yield on Cost
Based on the most recent annualized dividend rate of $3.64 per share, PNW has a current yield of approximately 3.55% using the end-period share price of $102.43.
Another useful measure is yield on cost, which compares the current annualized dividend to the original purchase price. Using the 2016 entry price of $77.31 per share, the current annualized dividend of $3.64 implies a yield on cost of 4.59%.
Yield on cost does not describe the return available to a new buyer today, but it is a helpful way to illustrate how a growing dividend stream can improve the income profile of a long-held position.
Key Takeaways From This 2016 PNW Investment
- A $10,000 investment in Pinnacle West Capital in June 2016 grew to $19,638.41 by June 2026 with dividends reinvested.
- The total return was 96.33%, equal to an annualized return of 6.98%.
- Dividends were a major contributor, with $32.12 per share paid over the period.
- The investor’s share count rose from 129.35 to 191.67 through reinvestment.
- At the end of the period, the stock’s indicated dividend yield was about 3.55%, and yield on cost was 4.59%.
Viewed through a long-horizon lens, the result underscores a familiar feature of utility investing: returns may not always be driven by dramatic multiple expansion or high-growth expectations, but patient ownership and reinvested income can still produce a solid cumulative outcome over a full market cycle.
Here’s one more investment quote before you go:
“Never test the depth of a river with both feet.” — Warren Buffett
