“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— 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. Using Prologis Inc (NYSE: PLD) as an example, a 20-year buy-and-hold investment beginning in 2006 produced a substantial total return for investors who stayed invested through market cycles and reinvested cash distributions.
PLD 20-Year Return Details
| Start date: | 09/01/2006 |
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| End date: | 08/31/2026 | ||||
| Start price/share: | $55.54 | ||||
| End price/share: | $139.92 | ||||
| Starting shares: | 180.05 | ||||
| Ending shares: | 345.39 | ||||
| Dividends reinvested/share: | $41.90 | ||||
| Total return: | 383.27% | ||||
| Average annual return: | 8.19% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $48,318.90 | ||||
A $10,000 investment in Prologis on 09/01/2006 would have grown to $48,318.90 by 08/31/2026, assuming dividends were reinvested. That equates to a 383.27% total return and an average annual return of 8.19%. [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
What Drove the 20-Year Return
The result was not driven by price appreciation alone. Prologis shares rose from $55.54 to $139.92 over the period, but the total-return outcome was strengthened materially by cash distributions that were reinvested into additional shares. Starting with 180.05 shares, the position grew to 345.39 shares through dividend reinvestment, illustrating how compounding can meaningfully increase ending value over a long horizon.
This distinction matters because price return and total return are not the same. Price return reflects only the change in the share price. Total return incorporates dividends, and in this case the cumulative dividends reinvested amounted to $41.90 per original share over the 20-year span examined. For income-producing equities, especially REITs, that difference can be substantial.
Why Dividends Matter for Prologis
Prologis is a real estate investment trust, or REIT, and dividends are a central part of the investment case for the sector. REIT structures are generally designed to distribute a large share of taxable income to shareholders, which is why dividend analysis is particularly relevant when evaluating long-term returns. In a DRIP framework, each distribution buys additional shares, and those shares can then generate their own dividends over time.
The calculations above assume dividends were reinvested using the closing price on the ex-dividend date. That is a standard way to model compounding, and it helps explain why the ending share count nearly doubled even though no additional external capital was contributed after the initial investment.
Current Yield and Yield on Cost
Based on the most recent annualized dividend rate of $4.28 per share, PLD has a current yield of approximately 3.06% using the $139.92 ending share price shown above.
Another useful measure is yield on cost, which compares the current annual dividend to the original purchase price rather than to the current market price. Using the same $4.28 annualized dividend and the 2006 purchase price of $55.54, the yield on cost works out to about 7.71%.
- Initial investment: $10,000
- Ending value: $48,318.90
- Total return with dividends reinvested: 383.27%
- Annualized return: 8.19%
- Current annualized dividend: $4.28 per share
- Current yield: 3.06%
- Yield on original cost: 7.71%
What This Shows About Long-Term REIT Investing
The Prologis example underscores several broader points about long-term investing. First, compounding generally requires time more than precision. Second, reinvested dividends can account for a meaningful share of wealth creation, particularly in income-oriented asset classes such as REITs. Third, a full-cycle holding period often includes multiple market regimes, making short-term volatility less informative than long-term cash generation and capital growth.
For Prologis specifically, the long-term return profile reflects both the market value of its shares and the cumulative effect of distributions over time. Investors reviewing historical performance should therefore focus on total return rather than price charts alone.
One more investment quote to leave you with:
“You don’t need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ.” — Warren Buffett
