“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— Warren Buffett
A long holding period can change how a stock investment is evaluated. Day-to-day price moves often dominate attention, but long-term total return is driven by a combination of share-price appreciation, dividends, and the compounding effect of reinvestment. For Target Corp (NYSE: TGT), that distinction is especially important: a $10,000 investment made in 2016 and held through August 2026 would have more than tripled on a total-return basis with dividends reinvested.
Target 10-Year Return at a Glance
| Start date: | 08/22/2016 |
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| End date: | 08/19/2026 | ||||
| Start price/share: | $70.39 | ||||
| End price/share: | $159.00 | ||||
| Starting shares: | 142.07 | ||||
| Ending shares: | 192.04 | ||||
| Dividends reinvested/share: | $34.72 | ||||
| Total return: | 205.35% | ||||
| Average annual return: | 11.81% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $30,526.26 | ||||
Using the figures above, a $10,000 investment in Target on 08/22/2016 would have grown to $30,526.26 by 08/19/2026, assuming dividends were reinvested. That equates to a total return of 205.35% and an average annual return of 11.81%. [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
What Drove Target’s Total Return?
Target’s 10-year outcome reflects two distinct drivers. First, the stock price rose from $70.39 to $159.00 per share. Second, the company paid substantial cash dividends over the period, with those distributions reinvested into additional shares. Together, those elements lifted the ending share count from 142.07 to 192.04, a meaningful increase that highlights the contribution of compounding.
That distinction matters. Looking only at the stock’s starting and ending prices understates the full investment result. Total return captures the economic value delivered to shareholders more completely because it includes both capital appreciation and income received along the way.
In simple terms:
- Price appreciation increased the value of each original share.
- Dividends provided cash distributions over time.
- Dividend reinvestment bought additional shares, which then generated their own future dividends.
- The combination produced a higher ending value than price change alone.
The Role of Dividends and Reinvestment
Over the holding period, Target paid $34.72 per share in cumulative dividends, based on the calculation shown above. Reinvesting those payments can materially change long-run results, particularly over multi-year periods in which a company continues paying and raising its dividend. In this example, dividend reinvestment added nearly 50 shares to the original position, increasing the final investment value beyond what buy-and-hold investors would have realized from price appreciation alone.
For the purpose of these calculations, dividends are assumed to be reinvested in additional shares at the closing price on the ex-dividend date. That is a standard way to estimate long-term DRIP returns, even though actual investor experience can vary slightly based on brokerage execution, taxes, and fractional-share treatment.
Current Yield and Yield on Cost
Based on the most recent annualized dividend rate of $4.64 per share, TGT has a current yield of approximately 2.92% at the $159.00 ending share price used in this analysis.
Another useful measure is yield on cost, which compares the current annualized dividend to the original purchase price rather than the current market price. Using the 2016 entry price of $70.39 per share, Target’s current annualized dividend implies a yield on cost of about 4.15%.
Key definitions:
- Current yield: annual dividend divided by the current share price.
- Yield on cost: annual dividend divided by the original purchase price.
Yield on cost can be useful for understanding how an income stream has grown relative to the original investment. However, it should not be confused with the return available to a new buyer today, which is better reflected by the current dividend yield.
What the 2016-2026 Target Investment Shows
The Target investment example underscores a broader principle in equity investing: long-term returns are often built through a combination of patience, cash-flow generation, and reinvestment discipline. The path over 10 years is rarely smooth, especially in retail, where margins, consumer demand, inventory management, and competitive pressures can all affect sentiment and valuation. Yet the ending result can differ sharply from what short-term volatility might suggest at any given moment.
For dividend-paying stocks in particular, measuring performance through total return offers a more complete framework than focusing on price charts alone. In Target’s case, the reinvested dividend stream was not a minor detail. It was a meaningful contributor to the final outcome.
Here’s one more investment quote before you go:
“Those who do not remember the past are condemned to repeat it.” — George Santayana
