“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— Warren Buffett
A 10-year investment in Public Service Enterprise Group Inc (NYSE: PEG) illustrates how a utility stock can compound returns through a combination of share-price appreciation and reinvested dividends. Using the period from 07/18/2016 through 07/15/2026, a $10,000 investment in PEG grew to $24,528.41, assuming all dividends were reinvested.
That result equates to a total return of 145.21% and an average annual return of 9.39%. For long-horizon investors, the exercise is useful not simply because of the ending value, but because it shows how much of long-term performance can come from steady dividend income being put back to work over time.
PEG 10-Year Return at a Glance
| Start date: | 07/18/2016 |
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| End date: | 07/15/2026 | ||||
| Start price/share: | $45.90 | ||||
| End price/share: | $79.88 | ||||
| Starting shares: | 217.86 | ||||
| Ending shares: | 306.97 | ||||
| Dividends reinvested/share: | $20.92 | ||||
| Total return: | 145.21% | ||||
| Average annual return: | 9.39% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $24,528.41 | ||||
On those assumptions, PEG more than doubled the initial capital over the period. The figures above were computed using the Dividend Channel DRIP Returns Calculator.
What Drove the Return
The return came from two distinct sources:
- Share-price appreciation: PEG rose from $45.90 to $79.88 over the measurement period.
- Dividend income: The stock distributed $20.92 per share in cumulative dividends over the 10 years examined, with those cash payments assumed to be reinvested into additional shares.
That reinvestment assumption matters. Starting with 217.86 shares, the position grew to 306.97 shares by the end of the period. In other words, dividends did not merely provide income; they increased the share count, which in turn amplified the value of the investment as the stock price advanced.
This is a central feature of total-return analysis for utility stocks and other dividend-paying equities. Looking only at price change can materially understate long-run performance, particularly when the holding period spans many years and dividends are consistently reinvested.
Current Yield and Yield on Cost
Based on the most recent annualized dividend rate of $2.68 per share, PEG has a current dividend yield of approximately 3.35% using the ending share price of $79.88.
Another useful measure is yield on cost, which compares the current annualized dividend to the original purchase price. Using the 2016 entry price of $45.90 per share, PEG’s current annualized dividend implies a yield on cost of 7.30%.
In concise terms:
- Current yield = current annual dividend divided by current share price
- Yield on cost = current annual dividend divided by original purchase price
Current yield indicates what a new buyer would earn at today’s price. Yield on cost shows how dividend growth can improve the income profile of a long-held position.
Why PEG Fits the Long-Horizon Discussion
Public Service Enterprise Group operates in the regulated utility space, a segment often associated with comparatively stable cash flows, regular capital spending, and an emphasis on dividends. That does not eliminate risk, but it helps explain why total return in utility names is often shaped as much by income compounding as by multiple expansion or rapid earnings growth.
For a stock like PEG, evaluating the past decade requires looking beyond the headline ending value. The more informative questions are whether the dividend remained meaningful, whether reinvestment added materially to share accumulation, and whether the stock generated a return profile consistent with the defensive characteristics typically sought in the sector. Over this 10-year period, the answer to each of those questions appears to be yes.
Past performance over one decade does not predict the next one, but the mechanics remain the same: future returns will likely depend on a combination of earnings and rate-base growth, dividend policy, valuation, and the pace at which reinvested cash distributions continue to compound.
