“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— Warren Buffett
A critical pearl of wisdom from Warren Buffett teaches us that with any potential stock investment we may make, as soon as our buy order is filled we will have a choice: to remain a co-owner of that company for the long haul, or to react to the inevitable short-term ups and downs that the stock market is famous for (sometimes sharp ups and downs).
The reality of this choice forces us to challenge our confidence in any given company we might invest into, and keep our eyes on the long-term time horizon. The market may go up and down in the interim, but over a decade-long holding period, will the investment succeed? For income-oriented investors, that question is often closely tied to the stability and growth of a company’s dividend stream.
Back in 2016, investors may have been asking themselves that very question about CenterPoint Energy, Inc ( NYSE: CNP ). CenterPoint Energy is a regulated utility serving electric and natural gas customers across several U.S. states, a business model that tends to offer relatively predictable cash flows and the potential for steady dividend payments. Let’s examine what would have happened over a decade-long holding period, had you invested in CNP shares back in 2016 and held on.
| Start date: | 03/30/2016 |
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| End date: | 03/27/2026 | ||||
| Start price/share: | $20.85 | ||||
| End price/share: | $42.38 | ||||
| Starting shares: | 479.62 | ||||
| Ending shares: | 662.24 | ||||
| Dividends reinvested/share: | $8.89 | ||||
| Total return: | 180.66% | ||||
| Average annual return: | 10.87% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $28,055.48 | ||||
The above analysis shows the decade-long investment result worked out quite well, with an annualized rate of return of 10.87%. This would have turned a $10K investment made 10 years ago into $28,055.48 today (as of 03/27/2026). On a total return basis, that is a gain of 180.66% (something to think about: how might CNP shares perform over the next 10 years?). These figures also underscore the power of compounding when dividends are systematically reinvested rather than taken in cash.
It is worth emphasizing that the period from 2016 to 2026 encompassed a wide range of market environments: a long-running bull market, the sharp COVID-19 sell-off and subsequent recovery, and episodes of rising interest rates that weighed on the broader utility sector. Despite these headwinds, a patient investor willing to hold CenterPoint Energy through the cycle, and to reinvest distributions, would have been rewarded with an equity-like total return profile combined with a relatively defensive business model.
Always an important consideration with a dividend-paying company is: should we reinvest our dividends? Over the past 10 years, CenterPoint Energy, Inc has paid $8.89/share in dividends. For the above analysis, we assume that the investor reinvests dividends into new shares of stock (for the above calculations, the reinvestment is performed using closing price on ex-div date for that dividend). That reinvestment boosted the share count from 479.62 to 662.24 over the decade, meaning a larger base of shares is now in place to generate future income.
For long-term holders, this steady increase in share count is crucial: even if the market price were to move sideways for a period, a growing number of dividend-paying shares can still translate into higher cash income, or into further reinvestment that may compound over subsequent years.
Based upon the most recent annualized dividend rate of .92/share, we calculate that CNP has a current yield of approximately 2.17%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .92 against the original $20.85/share purchase price. This works out to a yield on cost of 10.41%. For an investor who bought in 2016, every original dollar invested is now generating more than 10 cents of annual dividend income, before considering any further dividend growth.
For context, that level of return compares competitively with long-run equity market averages, and it comes from a regulated utility whose revenues are largely underpinned by approved rate frameworks and essential-service demand. Of course, no utility is risk-free: CenterPoint Energy remains exposed to regulatory decisions, capital intensity, interest-rate sensitivity, and evolving policy around the energy transition. However, the 10-year record highlighted here illustrates how a disciplined, income-oriented strategy can play out in practice when combined with a durable business model.
Investors considering CNP today should assess whether the company’s current valuation, balance sheet, capital spending plans, and regulatory backdrop support a similar trajectory over the coming decade. Past performance does not guarantee future results, but it can provide a useful roadmap for how a blend of moderate share-price appreciation and consistent dividends may contribute to long-term wealth creation.
Here’s one more great investment quote before you go:
“If you have trouble imagining a 20% loss in the stock market, you shouldn’t be in stocks.” — John Bogle
