“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 face a simple but consequential choice: remain a co-owner of that company for the long haul, or react to the inevitable short-term ups and downs that the stock market is famous for (sometimes sharp ups and downs).
This reality forces investors to challenge their conviction in any given company and to keep their eyes on a genuinely long-term time horizon. The market may fluctuate wildly in the interim, but over a decade-long holding period, will the investment succeed on a total-return basis and compensate for the risks taken?
Back in 2016, investors may have been asking themselves that very question about Host Hotels & Resorts Inc (NASD: HST), one of the largest publicly traded lodging real estate investment trusts (REITs) in the United States, with a portfolio focused on upscale and luxury hotel properties operated under brands such as Marriott, Ritz-Carlton, and Hyatt.
Host, as a hotel-focused REIT, is cyclical and economically sensitive: revenues are driven by business travel, group bookings, tourism trends, and broader GDP growth. Over the past decade the company and its shareholders have navigated a late-cycle expansion, a severe but temporary collapse in travel during the COVID-19 pandemic, and a subsequent recovery supported by pricing power and improving occupancy. With that backdrop in mind, let’s examine what would have happened over a decade-long holding period had you invested in HST shares back in 2016 and simply held on with dividends reinvested.
| Start date: | 03/31/2016 |
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| End date: | 03/30/2026 | ||||
| Start price/share: | $16.70 | ||||
| End price/share: | $18.96 | ||||
| Starting shares: | 598.80 | ||||
| Ending shares: | 877.74 | ||||
| Dividends reinvested/share: | $6.68 | ||||
| Total return: | 66.42% | ||||
| Average annual return: | 5.22% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $16,635.79 | ||||
The above analysis shows that the decade-long investment result for Host Hotels & Resorts Inc worked out positively, with an annualized rate of return of 5.22%. This would have turned a $10,000 investment made 10 years ago into $16,635.79 today (as of 03/30/2026). On a total return basis, that is a gain of 66.42% over the period.
While a mid-single-digit annualized return over 10 years does not put HST among the market’s top performers, it does illustrate the power of patient, dividend-focused investing even in a cyclical and at times highly volatile industry. Host’s share price experienced pronounced drawdowns during the 2020 pandemic, when hotel occupancy briefly collapsed, before benefiting from the normalization of travel, strong leisure demand, and improving pricing in key urban and resort markets.
For context, long-run historical total returns for the broader U.S. equity market have averaged roughly 8% to 10% annually, while U.S. REITs as a sector have tended to cluster modestly below or around that range over long periods, depending on the starting point in the cycle. Over this particular decade, HST’s 5.22% annualized return lagged a hypothetical broad-market index but delivered a still-meaningful accumulation of wealth for investors who remained committed through multiple macroeconomic regimes.
Another way to interpret these results is through the lens of volatility and income. REITs such as Host typically distribute a significant proportion of their cash flow as dividends, which can help to smooth total returns even when price performance is uneven. That pattern is clearly evident in this case study.
The Role Of Dividends And Reinvestment
Beyond share price change, another component of HST’s total return these past 10 years has been the payment by Host Hotels & Resorts Inc of $6.68/share in dividends to shareholders. Automatic reinvestment of dividends can be a powerful way to compound returns over time, and for the above calculations we presume that dividends are reinvested into additional shares of stock. (For the purpose of these calculations, the closing price on ex-date is used.)
Those reinvested dividends increased the investor’s share count from 598.80 at the outset to 877.74 by the end of the period, an increase of nearly 47%. In other words, while the share price advanced from $16.70 to $18.96, a considerable portion of the final portfolio value stems from owning more units of the business, not just from the market’s re-rating of the shares.
This dynamic illustrates a key concept for income-oriented investors: in a DRIP (dividend reinvestment plan) framework, periods of price weakness can actually accelerate long-term wealth creation by allowing reinvested dividends to purchase more shares at lower prices. For a cyclical REIT such as Host, those additional shares can position investors to benefit disproportionately when industry fundamentals recover.
Current Yield Versus Yield On Cost
Based upon the most recent annualized dividend rate of 0.80/share, we calculate that HST has a current yield of approximately 4.22%. That current yield is derived by comparing the indicated annual dividend to the prevailing share price at the end of the measurement period.
Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 0.80 against the original $16.70/share purchase price. This works out to a yield on cost of 25.27%, meaning that for an investor who bought in 2016 and held, the annual dividend cash flow now represents more than a quarter of the initial capital deployed on a per-share basis.
Yield on cost is not a valuation measure and should not be used in isolation to make buy or sell decisions; the market correctly focuses on the forward yield relative to today’s price and the sustainability of the underlying payout. Nonetheless, yield on cost can be a useful way for long-term investors to track the growth of their income stream over time and to assess whether a holding has met their original cash-flow objectives.
Business Fundamentals Behind The Numbers
Over the past decade, Host Hotels & Resorts has remained the largest lodging REIT in the S&P 500, with a portfolio skewed toward high-quality urban and resort assets and a balance sheet generally characterized by investment-grade credit ratings, staggered debt maturities, and a preference for unsecured debt financing. These attributes have historically given the company a degree of financial flexibility to navigate downturns and selectively reinvest in its portfolio.
Key operational metrics such as revenue per available room (RevPAR), average daily rate (ADR), and occupancy have been central drivers of Host’s cash flows and, by extension, its ability to pay and grow dividends over time. The decade in question included:
- A late-cycle expansion phase in which corporate travel and group bookings supported healthy RevPAR growth;
- A sharp contraction in 2020 as global travel demand dropped due to the COVID-19 pandemic, pressuring both occupancy and room rates;
- A subsequent period of recovery marked by strong leisure travel, improving international demand, and gradually normalizing group and business travel, which helped restore profitability and support the resumption and growth of dividend payments.
Host’s capital allocation over the decade has also mattered to investors: the company has pursued a strategy of recycling capital out of non-core or lower-growth assets and into properties with stronger long-term demand characteristics, while maintaining discipline on leverage. Such portfolio optimization can influence the stability and growth trajectory of funds from operations (FFO), a key earnings metric for REITs, and therefore the sustainability of the dividend stream on which total-return investors often rely.
Risk Considerations For Long-Term Holders
While the backward-looking numbers are encouraging, investors contemplating the next 10 years in HST should remain mindful of the risks that could influence future returns:
- Economic sensitivity: Lodging is one of the more cyclical REIT subsectors. Recessions, reduced corporate travel budgets, or prolonged weakness in group and convention demand can weigh on occupancy and room rates.
- Interest-rate environment: As a REIT, Host distributes a substantial share of its income, limiting retained earnings for growth. Changes in interest rates affect both the cost of capital and relative valuation versus fixed income instruments.
- Property-market dynamics: New hotel supply, changes in local regulations, and competitive pressures in key markets can impact asset-level performance.
- Structural shifts in travel: Remote and hybrid work, evolving corporate travel policies, and the growth of alternative accommodations can all influence long-term demand patterns.
For investors applying Buffett’s “10-year test” to a hospitality REIT, a clear understanding of these risk factors, together with a view on management’s capital allocation discipline and balance sheet strategy, is essential.
Looking Ahead From A Decade-Long Case Study
The backward-looking calculation here is, by design, a simple and transparent case study. It assumes that an investor bought once at the start date, reinvested all dividends, and held without regard to interim volatility. Real-world outcomes for individual investors may differ materially depending on the timing of additional purchases or sales, tax considerations, and behavioral responses to market swings.
Nonetheless, the exercise highlights several important lessons for income and total-return investors considering REITs such as Host Hotels & Resorts:
- Total return in a dividend-paying security is the combination of price appreciation and income, with reinvested dividends often playing an outsized role over long horizons.
- Cyclical drawdowns can be severe, especially in sectors such as lodging, but investors who maintain a long-term perspective and a focus on underlying cash flows can still realize acceptable returns across a full cycle.
- Measuring both current yield and yield on cost can provide different, complementary perspectives on an investment’s income-generating profile, even if only current yield is relevant for new capital allocation decisions today.
The results presented here are backward-looking and do not guarantee or imply future performance. Past performance is not a reliable indicator of future results, and all investments in equities and REITs involve the risk of loss of principal. Investors should conduct their own due diligence, including an assessment of Host’s current valuation, balance sheet strength, portfolio positioning, and the macroeconomic outlook, before making any investment decisions.
The numbers summarized above were computed with the Dividend Channel DRIP Returns Calculator, which is designed to illustrate the impact of dividend reinvestment on long-term total returns.
How might HST shares perform over the next 10 years? That will depend on factors ranging from global growth and interest rates to travel demand and Host’s own capital allocation choices. For investors willing to think in terms of decades rather than quarters, the historical record at least provides a framework for framing expectations and risk tolerance.
One more investment quote to leave you with:
“Based on my own personal experience, both as an investor in recent years and an expert witness in years past, rarely do more than three or four variables really count. Everything else is noise.” — Martin Whitman
