“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— Warren Buffett
One of the key lessons long-term investors can draw from Warren Buffett is the importance of thinking in years and decades, not days and weeks. Immediately after buying shares of a stock, investors can watch its value change minute by minute. Some days the stock market will be up, other days down, and these swings can easily distract from the long-term compounding that ultimately drives wealth creation.
Against that backdrop, it is instructive to examine how a decade-long holding period would have treated an investor who considered Extra Space Storage Inc (NYSE: EXR) in 2016, bought the stock, ignored the market’s ups and downs, and simply held through to today.
| Start date: | 03/14/2016 |
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| End date: | 03/12/2026 | ||||
| Start price/share: | $87.28 | ||||
| End price/share: | $140.18 | ||||
| Starting shares: | 114.57 | ||||
| Ending shares: | 164.94 | ||||
| Dividends reinvested/share: | $45.92 | ||||
| Total return: | 131.21% | ||||
| Average annual return: | 8.74% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $23,114.97 | ||||
As we can see, the decade-long investment result worked out well, with an annualized rate of return of 8.74%. That would have turned a $10,000 investment made 10 years ago into $23,114.97 today (as of 03/12/2026). On a total return basis, that is a gain of 131.21% — a meaningful outcome for a core real estate holding and a reminder of what patient compounding can do. It also naturally prompts the question: how might EXR shares perform over the next 10 years?
It is useful to remember that Extra Space Storage Inc is a self-storage real estate investment trust (REIT), with a portfolio that spans thousands of properties across the United States. The business model tends to be relatively resilient: demand for storage can be driven by life events such as moving, downsizing, or business inventory needs, which often persist across economic cycles. Over the past decade the company has also been active on the acquisition front, consolidating smaller operators and seeking operating efficiencies. Those underlying corporate actions, together with steady occupancy levels and rent growth over time, are what ultimately show up in shareholder returns.
Notice that Extra Space Storage Inc paid investors a total of $45.92 per share in dividends over the 10-year holding period, marking a second component of total return beyond share price appreciation alone. Much like watering a tree, reinvesting dividends can help an investment grow over time — for the above calculations we assume dividend reinvestment (and for this exercise the closing price on the ex-dividend date is used for the reinvestment of a given dividend).
For income-focused investors, the role of the dividend stream is especially important in a REIT such as Extra Space Storage. REITs are required by U.S. tax law to distribute at least 90% of their taxable income to shareholders in the form of dividends, in exchange for favorable treatment at the corporate tax level. As a result, they often appeal to investors seeking a blend of current income and long-term total return. In practice, this means that a significant portion of a REIT investor’s long-run return typically comes from dividends, especially when those dividends are reinvested systematically.
Based upon the most recent annualized dividend rate of $6.48 per share, we calculate that EXR has a current yield of approximately 4.62%. Another interesting data point to examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of $6.48 against the original $87.28 per share purchase price. This works out to a yield on cost of 5.29%, illustrating how a growing dividend can enhance the income profile of a long-term holding even if the current market yield appears more modest.
From a risk perspective, investors should remember that the path to that 8.74% annualized return was not smooth. Extra Space Storage shares experienced periods of volatility along the way, including drawdowns during broader market sell-offs and shifts in interest-rate expectations that can weigh on REIT valuations. The ability to hold through those periods, reinvest dividends, and maintain a long-term mindset was essential to realizing the full 10-year outcome. This is precisely the type of behavior Buffett alludes to in his observation about being comfortable if the market were to “shut down” for a decade.
Looking ahead, prospective returns for EXR will depend on a different set of variables than those that shaped the past decade: the level and trajectory of interest rates, competitive dynamics in self-storage markets, the company’s acquisition pipeline and integration execution, and management’s capital allocation decisions, including the balance between dividends, debt reduction, and strategic growth investments. None of these are knowable in advance with certainty, but the historical data above help frame what disciplined ownership of a quality REIT has delivered over a full market cycle.
One more piece of investment wisdom to leave you with:
“I think you have to learn that there’s a company behind every stock, and that there’s only one real reason why stocks go up. Companies go from doing poorly to doing well or small companies grow to large companies.” — Peter Lynch
Taken together, the 10-year experience of a buy-and-hold investor in Extra Space Storage and the perspectives from Buffett and Lynch underscore the same core idea: focus on underlying business quality, allow time for compounding to work, and be disciplined about reinvesting income rather than reacting to short-term price movements.
