“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— Warren Buffett
The investment philosophy practiced by Warren Buffett calls for investors to take a genuinely long-term horizon when making an investment, such as a two-decade holding period (or even longer), and to reconsider making the investment in the first place if unable to envision holding the stock for at least five years. That framework is particularly relevant for dividend-paying, regulated utilities, where the compounding of cash flows and dividends tends to play out over long cycles rather than quarters.
Today, we look at how such a long-term strategy would have worked for investors in NiSource Inc. (NYSE: NI) who bought shares back in 2006 and held through to today, reinvesting all dividends along the way.
A 20-Year Look Back At NiSource
| Start date: | 03/23/2006 |
|
|||
| End date: | 03/20/2026 | ||||
| Start price/share: | $8.17 | ||||
| End price/share: | $45.02 | ||||
| Starting shares: | 1,223.99 | ||||
| Ending shares: | 2,619.02 | ||||
| Dividends reinvested/share: | $12.81 | ||||
| Total return: | 1,079.08% | ||||
| Average annual return: | 13.13% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $117,951.25 | ||||
As shown above, the two-decade investment result worked out quite well, with an annualized rate of return of 13.13%. This would have turned a $10K investment made 20 years ago into $117,951.25 today (as of 03/20/2026). On a total return basis, that is a gain of 1,079.08% — an illustration of how time, dividends and disciplined reinvestment can materially compound capital. It is also a reminder to ask the forward-looking question: how might NI shares perform over the next 20 years?
The Power Of Reinvested Dividends
Notice that NiSource Inc. paid investors a total of $12.81/share in dividends over the 20-year holding period, marking a second component of the total return beyond share price change alone. Much like watering a tree, reinvesting dividends can help an investment to grow over time — for the above calculations we assume dividend reinvestment (and for this exercise the closing price on ex-date is used for the reinvestment of a given dividend).
Because NiSource is a regulated utility with relatively stable cash flows, it has historically been able to return a meaningful portion of earnings to shareholders while continuing to invest in its gas and electric infrastructure. Over time, these reinvested dividends purchased additional shares, which then generated their own dividends, creating a compounding effect that is difficult to replicate over shorter time horizons.
[These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Current Yield And Yield On Cost
Based upon the most recent annualized dividend rate of 1.2/share, we calculate that NI has a current yield of approximately 2.67%. Another interesting datapoint we can examine is “yield on cost” — in other words, we can express the current annualized dividend of 1.2 against the original $8.17/share purchase price. This works out to a yield on cost of 32.68%.
For long-term income-focused investors, this yield-on-cost figure is a concrete way of seeing how a modest-looking current dividend yield can, over time and with growth, translate into a very high income stream relative to the original capital outlay. While market prices fluctuate, the income produced per original dollar invested can continue to climb if a company maintains or grows its dividend.
Context: NiSource As A Regulated Utility
NiSource is a regulated natural gas and electric utility serving approximately 3.5 million natural gas customers and around half a million electric customers across several Midwestern and Mid-Atlantic states. As with many utilities, the company operates under state-level regulatory oversight, which typically allows for recovery of prudent infrastructure investments and the opportunity to earn an approved return on equity.
From 2006 through 2026, NiSource has invested heavily in modernizing its gas distribution and electric networks, including safety-related pipeline replacements, grid upgrades and cleaner generation resources. For equity holders, these capital programs can support the utility’s long-term rate base growth, which in turn underpins earnings and dividend capacity over multi-year planning cycles.
It is also worth noting that the 20-year period under review included several major market and macroeconomic shocks, including the 2008‑2009 financial crisis, the 2020 COVID-19 pandemic and multiple interest-rate cycles. The fact that a regulated utility such as NiSource could deliver a double-digit annualized total return across such a backdrop highlights both the resilience of the business model and the importance of staying invested through volatility.
What Long-Term Investors Can Take Away
Past performance does not guarantee future results, and individual investors should always consider valuation, balance sheet strength, regulatory risk and interest-rate sensitivity when assessing a utility stock today. Nonetheless, the NiSource example underscores several broader lessons that are consistent with Buffett’s long-term philosophy:
- Time in the market has been a powerful ally for patient investors, even in a defensive sector such as utilities.
- Dividend reinvestment meaningfully amplified returns relative to price appreciation alone.
- A stable, regulated business can still deliver equity-like growth in total return when held over decades.
Investors evaluating NiSource or similar companies today will need to form a view on future rate-base growth, regulatory outcomes, decarbonization capital needs and the interest-rate environment. But as the 2006‑2026 experience illustrates, combining sound businesses with time and disciplined reinvestment can be a potent strategy for building long-term wealth.
One more investment quote to leave you with:
“Your success in investing will depend in part on your character and guts and in part on your ability to realize, at the height of ebullience and the depth of despair alike, that this too, shall pass.” — Jack Bogle
