“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— Warren Buffett
A long-term investment in International Flavors & Fragrances Inc. (NYSE: IFF) produced a positive total return over the past 20 years, with dividend reinvestment playing a meaningful role in the outcome. Using a starting investment date of 10/02/2006 and an ending date of 09/30/2026, a hypothetical $10,000 position grew to $33,069.80, based on the return data shown below.
That result highlights two core drivers of long-horizon equity returns: share-price appreciation and the compounding effect of reinvested dividends. For a company such as IFF, which operates in flavors, fragrances, food ingredients, health, and biosciences, the case for buy-and-hold ownership is often tied to durable customer relationships, recurring demand across consumer end markets, and cash generation that can support ongoing dividend payments.
IFF 20-Year Return Details
| Start date: | 10/02/2006 |
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| End date: | 09/30/2026 | ||||
| Start price/share: | $39.65 | ||||
| End price/share: | $83.48 | ||||
| Starting shares: | 252.21 | ||||
| Ending shares: | 396.01 | ||||
| Dividends reinvested/share: | $39.65 | ||||
| Total return: | 230.59% | ||||
| Average annual return: | 6.16% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $33,069.80 | ||||
On these assumptions, the investment more than tripled over the 20-year period. The annualized return of 6.16% matters because it makes the long holding period comparable with other opportunities and benchmarks; total return alone can overstate the impression of performance when the time horizon is long.
The figures also show that reinvestment materially increased share ownership. An initial 252.21 shares became 396.01 shares by the end of the period. That growth in share count helped lift the ending value beyond what price appreciation alone would have produced.
[These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
What Drove the Return?
The IFF return profile in this example reflects three distinct components:
- Share-price gain: the stock price increased from $39.65 to $83.48 over the measurement period.
- Cash dividends paid: IFF distributed $39.65 per share in cumulative dividends over the past 20 years.
- Dividend reinvestment: those cash distributions were assumed to be reinvested on each ex-dividend date, increasing the number of shares owned.
This is a useful reminder that long-term stock returns often depend on more than headline price performance. In dividend-paying equities, capital appreciation and income generation work together, and the compounding effect becomes more visible over extended holding periods.
Why Dividend Reinvestment Matters
Dividend reinvestment is central to this analysis. Over time, reinvested dividends purchase additional shares, and those added shares can themselves generate future dividends. In periods when the stock trades below prior highs, reinvestment can be especially powerful because each dividend dollar buys more shares.
For IFF, cumulative dividends of $39.65 per share over the 20-year period effectively matched the original purchase price per share in this example. That does not mean the investment paid itself back in a simple accounting sense, but it does illustrate how meaningful the income component was in the overall return.
Current Yield and Yield on Cost
Based on the most recent annualized dividend rate of $1.60 per share, IFF has a current yield of approximately 1.92% using the cited share price of $83.48.
Another useful lens is yield on cost, which compares the current annual dividend to the original purchase price rather than the current market price. Using the 2006 starting price of $39.65 per share, the current annualized dividend rate of $1.60 implies a yield on cost of 4.84%.
Yield on cost can help show how dividend growth affects the economics of a long-term holding. However, it is best used as a historical perspective on a specific position, not as a substitute for evaluating the stock’s current valuation, operating outlook, or forward return potential.
A Concise Takeaway
A $10,000 investment in International Flavors & Fragrances in 2006 grew to $33,069.80 by 09/30/2026, assuming dividends were reinvested. The result equates to a 230.59% total return and a 6.16% average annual return. The case study underscores the long-term impact of dividend compounding, not just stock-price appreciation.
“It’s not how much money you make, but how much money you keep.” — Robert Kiyosaki
