“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— Warren Buffett
A long-term investment in Standard & Poor’s Global Inc (NYSE: SPGI) illustrates how compounding can work when capital is left invested through multiple market cycles. Over the 20-year period from 06/23/2006 through 06/22/2026, a hypothetical $10,000 investment in SPGI, with dividends reinvested, grew to $115,589.82. That translates to a total return of 1,055.38% and an annualized return of 13.01%.
The exercise is useful not simply because the ending value is large, but because it highlights the two core drivers of long-term equity returns: share-price appreciation and the reinvestment of cash distributions. In SPGI’s case, both contributed materially to the outcome.
SPGI 20-Year Return Details
| Start date: | 06/23/2006 |
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| End date: | 06/22/2026 | ||||
| Start price/share: | $49.94 | ||||
| End price/share: | $407.39 | ||||
| Starting shares: | 200.24 | ||||
| Ending shares: | 283.60 | ||||
| Dividends reinvested/share: | $41.52 | ||||
| Total return: | 1,055.38% | ||||
| Average annual return: | 13.01% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $115,589.82 | ||||
On these assumptions, SPGI delivered a strong long-term total return. A $10,000 initial investment compounded into more than $115,000 over 20 years, despite the fact that the period would have included recessions, market drawdowns, shifts in interest rates, and major changes in the financial information industry. [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
What Drove the Return
The return came from two sources:
- Capital appreciation: the share price increased from $49.94 to $407.39.
- Dividend reinvestment: cash dividends were assumed to be reinvested into additional shares, increasing the share count from 200.24 to 283.60.
That distinction matters. Price return alone can understate what a disciplined long-term holder actually earns, particularly when dividends are reinvested during periods of weakness as well as strength. In this case, the investment did not merely rise in price; it also accumulated additional ownership over time.
Why Reinvested Dividends Matter
Over the period examined, SPGI paid $41.52 per share in dividends that were reinvested. Reinvestment means those cash distributions were used to buy more shares on each ex-dividend date using the closing price assumption embedded in the calculation. That process created a larger ending share count, which in turn increased the value of the position as the stock appreciated.
For long-horizon investors, this is one of the central mechanics of compounding. Even when a stock’s dividend yield is not especially high, reinvestment can still have a meaningful effect when sustained over many years.
Current Yield and Yield on Cost
Based on the most recent annualized dividend rate of $3.88 per share, SPGI has a current yield of approximately 0.95%, using the ending share price of $407.39 shown above.
Another way to view the dividend is through yield on cost. This measures the current annual dividend relative to the original purchase price rather than the current market price. Using the 2006 starting price of $49.94 per share, the current $3.88 annualized dividend equates to a yield on cost of about 7.77%.
That is a notably different figure from the stock’s current yield. The difference underscores an important point: for successful long-term holdings, dividend growth can materially change the income profile of an original investment even when the stock trades at a relatively modest headline yield today.
A Brief Business Context
SPGI is not a traditional high-yield equity. Its appeal has generally been tied more to business quality, recurring revenue characteristics, and durable competitive positioning than to income alone. The company operates across credit ratings, benchmarks and indices, market intelligence, and commodities and energy information. Those businesses tend to be closely linked to global capital markets activity and the ongoing demand for data, analytics, and pricing information.
That helps explain why long-term results can be driven more by earnings growth and valuation durability than by starting yield. In businesses with strong market positions and scalable information franchises, a modest cash payout can still sit alongside substantial total-return potential.
Key Takeaways
- A $10,000 investment in SPGI on 06/23/2006 grew to $115,589.82 by 06/22/2026, assuming dividends were reinvested.
- The total return was 1,055.38%, or 13.01% annualized.
- The share count rose from 200.24 to 283.60 because dividends were reinvested.
- SPGI’s current yield is approximately 0.95% based on the figures shown.
- Using the original purchase price, the current annualized dividend implies a yield on cost of about 7.77%.
Long holding periods do not eliminate risk, but they can make the mathematics of compounding far more visible. SPGI’s 20-year record in this example shows how a combination of price appreciation, dividend reinvestment, and business durability can produce substantial cumulative returns over time.
“Based on my own personal experience, both as an investor in recent years and an expert witness in years past, rarely do more than three or four variables really count. Everything else is noise.” — Martin Whitman
