“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— Warren Buffett
The above quote from Warren Buffett is timeless, and brings into focus the choice about time horizon that any investor should think about before buying a stock they are considering. Behind every stock is an actual business; what will that business look like over a two-decade period? For companies that can compound earnings over long stretches of time, patient shareholders can see returns that far exceed broad equity benchmarks.
Today, let’s look backwards in time to 2006, and take a look at what happened to investors who asked that very question about Regeneron Pharmaceuticals, Inc. (NASD: REGN), by taking a look at the investment outcome over a two-decade holding period. Regeneron is a large-cap biotechnology company focused on discovering, developing and commercializing medicines for serious diseases, and over the last twenty years it has evolved from a development-stage biotech into a diversified, highly profitable pharmaceutical franchise.
| Start date: | 03/13/2006 |
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| End date: | 03/12/2026 | ||||
| Start price/share: | $16.30 | ||||
| End price/share: | $746.61 | ||||
| Starting shares: | 613.50 | ||||
| Ending shares: | 617.57 | ||||
| Dividends reinvested/share: | $4.46 | ||||
| Total return: | 4,510.87% | ||||
| Average annual return: | 21.10% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $460,857.05 | ||||
The above analysis shows the two-decade investment result worked out exceptionally well, with an annualized rate of return of 21.10%. This would have turned a $10K investment made 20 years ago into $460,857.05 today (as of 03/12/2026). On a total return basis, that’s a result of 4,510.87%, meaning an investor multiplied their capital more than 45-fold over the period. For context, that pace of compounding is well ahead of the long-run historical return for the S&P 500, underscoring the potential of successful growth franchises in healthcare. (Something to think about: how might REGN shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Beyond share price change, another component of REGN’s total return these past 20 years has been the payment by Regeneron Pharmaceuticals, Inc. of $4.46/share in dividends to shareholders. Automatic reinvestment of dividends can be a powerful way to compound returns, and for the above calculations we presume that dividends are reinvested into additional shares of stock through a dividend reinvestment plan (DRIP). Over long time horizons, even modest dividend streams can add incremental shares that continue to participate in any future price appreciation. (For the purpose of these calculations, the closing price on ex-date is used).
Notably, Regeneron historically emphasized reinvesting cash flows into research and development rather than paying cash dividends. As many biotechnology companies mature and their cash generation grows more predictable, they sometimes introduce regular dividends or share repurchase programs as additional ways of returning capital to shareholders. In this illustration, the dividend component is modest compared with the contribution from price appreciation, which is typical of high-growth healthcare names during strong expansion phases.
Based upon the most recent annualized dividend rate of 3.76/share, we calculate that REGN has a current yield of approximately 0.50%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 3.76 against the original $16.30/share purchase price. This works out to a yield on cost of 3.07%, which highlights how income streams can become more meaningful relative to the initial outlay as a company grows and raises its payout over time.
The drivers of REGN’s long-term performance have included a combination of successful drug launches, expansion into new therapeutic indications, and a robust research pipeline. Regeneron has leveraged its antibody discovery platforms to build franchises in ophthalmology, immunology and oncology, among other areas. For long-horizon investors, these kinds of secular growth tailwinds — supported by demographic trends, unmet medical needs and ongoing innovation — can help sustain earnings growth across market cycles, although the path is rarely linear.
At the same time, biotechnology investing carries meaningful risks, including clinical trial setbacks, regulatory uncertainty, potential competition from biosimilars and pricing pressure from payors. The REGN case study illustrates what can happen when a company successfully navigates those challenges, but investors should remain aware that outcomes across the biotech sector are highly dispersed. Position sizing, diversification and an appropriate time horizon remain critical portfolio considerations.
For investors evaluating opportunities today, the REGN experience is a reminder of how compounding works in practice: high rates of return sustained over lengthy periods can transform relatively small initial sums into substantial capital. Whether in biotechnology or other sectors, focusing on the underlying economics of the business, the strength of its competitive advantages and the quality of management’s capital allocation decisions can be more important than trying to trade short-term price moves.
Here’s one more great investment quote before you go:
“The policy of being too cautious is the greatest risk of all.” — Jawaharlal Nehru
