“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— Warren Buffett
Investors can learn a great deal from Warren Buffett, whose quote above underscores the importance of time horizon and discipline. Before committing capital to any equity, a long-term investor is well served by asking a simple question: can we envision holding this stock through an entire market cycle — potentially for a full decade, irrespective of interim volatility?
To illustrate this concept in practice, consider a hypothetical “buy-and-hold” investor evaluating Amgen Inc (NASD: AMGN) back in 2016. At that time, the investor might have been weighing whether Amgen’s business model, balance sheet strength, and dividend profile would justify a 10-year holding period. Had that investor answered “yes” and then actually held the position for the subsequent decade, the outcome would have looked as follows.
| Start date: | 04/11/2016 |
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| End date: | 04/08/2026 | ||||
| Start price/share: | $156.39 | ||||
| End price/share: | $349.81 | ||||
| Starting shares: | 63.94 | ||||
| Ending shares: | 86.01 | ||||
| Dividends reinvested/share: | $69.44 | ||||
| Total return: | 200.89% | ||||
| Average annual return: | 11.65% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $30,092.35 | ||||
As shown above, the 10-year investment result worked out strongly, with an annualized rate of return of 11.65%. That compounding rate would have turned a $10,000 investment made 10 years ago into $30,092.35 today (as of 04/08/2026). On a total return basis, that represents a gain of 200.89% over the period. For context, that outcome spans an environment that included rising and falling interest rates, multiple market corrections, a global pandemic and subsequent recovery — precisely the type of macro volatility that can test a long-term investor’s resolve.
From a practical standpoint, this type of analysis demonstrates how a high-quality large-cap biotechnology company can function as a core holding in a diversified portfolio. Over this time frame Amgen continued to invest in its research and development pipeline, executed on share repurchases, and delivered regular dividend growth, all of which contributed to shareholder returns. It is also worth noting that, as with most equities, the path of returns was not linear; drawdowns occurred along the way, but the end result still rewarded patience.
[These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Always an important consideration with a dividend-paying company is: should we reinvest our dividends? Over the past 10 years, Amgen Inc has paid $69.44/share in dividends. For the above analysis, we assume that the investor reinvests dividends into new shares of stock — in other words, a classic dividend reinvestment plan (DRIP) approach. For these calculations, the reinvestment is performed using the closing price on the ex-dividend date for each dividend.
Dividend reinvestment serves two purposes for a long-term holder. First, it steadily increases the share count over time (from 63.94 starting shares to 86.01 ending shares in this example), which in turn increases the investor’s claim on future earnings and dividends. Second, it effectively automates a dollar-cost-averaging discipline, acquiring more shares when the stock price is temporarily depressed and fewer when valuations are richer. Over long horizons, this mechanism can materially enhance total return, particularly for companies that continue to grow their payout.
Based upon the most recent annualized dividend rate of $10.08/share, we calculate that AMGN has a current yield of approximately 2.88%. Another interesting data point we can examine is ‘yield on cost’ — that is, we can express the current annualized dividend of $10.08 against the original $156.39/share purchase price. This works out to a yield on cost of 6.45%, meaning that a holder from 2016 is now receiving income of roughly 6.45% per year on the original capital at risk.
For long-term income-oriented investors, this distinction between current yield and yield on cost is important. While the market today may see Amgen as a sub-3% yield equity, the investor who committed capital a decade earlier and stayed the course is effectively earning more than double that percentage on the original investment. If Amgen continues its history of dividend growth, yield on cost would be expected to rise further over time, even if the market yield remains broadly in line with peers due to share price appreciation.
Of course, investors should also weigh other factors before extrapolating past performance into the future. Key considerations include the sustainability of Amgen’s cash flows, competitive dynamics across its therapeutic franchises, ongoing regulatory risk associated with drug pricing, and the health of its development pipeline. Balance sheet leverage, capital allocation priorities between dividends, buybacks and acquisitions, and the broader macroeconomic backdrop will also shape future return potential.
Nonetheless, the 2016‑2026 period provides a useful case study in how a disciplined buy-and-hold approach in a mature, cash-generative biotechnology name can compound capital and income meaningfully over a decade. For investors constructing or revisiting their own long-term strategies, Amgen’s experience over this horizon offers a tangible example of how time in the market, combined with dividend reinvestment, can do much of the heavy lifting.
More investment wisdom to ponder:
“Money is better than poverty, if only for financial reasons.” — Woody Allen
