“I buy on the assumption that they could close the market the next day and not reopen it for five years.”
— Warren Buffett
A five-year holding period can be a useful test of how a dividend-paying utility stock compounds over time. For Exelon Corp (NASD: EXC), a $10,000 investment made on 09/01/2021 and held through 08/31/2026, with dividends reinvested, would have grown to $14,625.38. That translates to a 46.27% total return and an average annual return of 7.90%.
Those figures highlight an important distinction in utility-stock performance: total return is often driven by both share-price appreciation and dividend income. In Exelon’s case, the investment outcome over this period reflects not only a higher ending share price, but also the compounding effect of reinvested cash distributions.
Exelon 5-Year Return Details
| Start date: | 09/01/2021 |
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| End date: | 08/31/2026 | ||||
| Start price/share: | $35.38 | ||||
| End price/share: | $43.72 | ||||
| Starting shares: | 282.65 | ||||
| Ending shares: | 334.56 | ||||
| Dividends reinvested/share: | $7.03 | ||||
| Total return: | 46.27% | ||||
| Average annual return: | 7.90% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $14,625.38 | ||||
In practical terms, the initial purchase at $35.38 per share bought 282.65 shares. With dividends reinvested over the period, the share count rose to 334.56 shares by 08/31/2026. That increase in ownership was an important contributor to the final ending value.
What Drove Exelon’s Total Return?
Exelon’s five-year total return came from two sources:
- Share-price appreciation: the stock rose from $35.38 to $43.72.
- Dividend income: investors received $7.03 per share in dividends over the period, assumed here to be reinvested.
This distinction matters. Looking only at the stock price would understate the investment result. For many regulated utilities and other income-oriented equities, reinvested dividends can account for a meaningful share of long-term compounding.
The calculation above assumes each dividend was reinvested into additional shares at the closing price on the ex-dividend date. That is a standard way to measure DRIP-style performance and provides a fuller picture of shareholder return than price performance alone. [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Current Yield and Yield on Cost
Based on the most recent annualized dividend rate of $1.68 per share, EXC has a current yield of approximately 3.84% using the ending share price shown above.
Another useful metric is yield on cost, which compares the current annualized dividend to the original purchase price rather than the current market price. Using the $35.38 entry price from 09/01/2021, Exelon’s current $1.68 annualized dividend implies a yield on cost of about 4.75%.
Yield on cost does not measure what a new buyer would earn today, but it can help illustrate how dividend growth and a favorable entry price affect the income profile of a long-held position.
Why the Exelon Example Matters
Exelon is a useful case study in the role of patience, reinvestment, and income in equity returns. A mid-single-digit dividend yield is not required to generate a solid five-year outcome; what matters is the combination of cash distributions, the stability of those distributions, and the ability to compound them over time.
For utility stocks in particular, headline price performance can obscure the full economics of ownership. Total return analysis helps separate short-term market moves from the cumulative impact of dividends and steady capital appreciation.
