“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— Warren Buffett
A long-term investment in Target Corp (NYSE: TGT) illustrates how total return in a mature retail stock is shaped by both share-price appreciation and dividend reinvestment. Using a 20-year holding period beginning in May 2006, a $10,000 investment in TGT grew to $41,102.24 by May 20, 2026, assuming dividends were reinvested on the ex-dividend date.
That outcome translates to a total return of 310.93% and an average annual return of 7.32%. For long-horizon investors, the result highlights a core point: in dividend-paying equities, the ending value is driven not only by the stock’s price at the start and finish, but also by the cumulative effect of reinvesting distributions over time.
TGT 20-Year Return Details
| Start date: | 05/22/2006 |
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| End date: | 05/20/2026 | ||||
| Start price/share: | $49.13 | ||||
| End price/share: | $122.33 | ||||
| Starting shares: | 203.54 | ||||
| Ending shares: | 335.92 | ||||
| Dividends reinvested/share: | $46.04 | ||||
| Total return: | 310.93% | ||||
| Average annual return: | 7.32% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $41,102.24 | ||||
In practical terms, every $10,000 invested in Target in 2006 became approximately $41,102 over the measured period. [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
How Dividend Reinvestment Changed the Outcome
The return profile is notable because Target has long been a dividend-paying retailer. Over the 20-year period shown above, the company paid $46.04 per share in cumulative dividends, and those cash distributions were assumed to be reinvested into additional shares. That reinvestment increased the share count from 203.54 shares at the start to 335.92 shares at the end.
This is the central mechanics of total return in a dividend stock:
- Share-price appreciation increases the value of the original investment.
- Cash dividends provide an additional source of return.
- Reinvested dividends buy more shares, which can themselves generate future dividends.
- Over long periods, compounding can materially widen the gap between price return and total return.
For a company such as Target, where income has historically been part of the investment case, ignoring reinvested dividends would understate the economic result of a long holding period.
Price Return vs. Total Return in Target Stock
Target’s share price rose from $49.13 to $122.33 over the period. That price gain alone was meaningful, but the larger investment result came from combining price appreciation with disciplined reinvestment. The difference matters because long-run equity returns are often discussed in headline price terms, while the actual wealth-building experience depends on total return.
This distinction is especially important in lower-growth or mature businesses, where dividends can account for a substantial portion of long-term shareholder return. Retail stocks often move through cycles tied to consumer spending, merchandising execution, inventory management, margins, and valuation multiples. Reinvested income can help smooth the impact of those cycles over time.
What Is Target’s Yield on Cost?
Based on the most recent annualized dividend rate of $4.56 per share, TGT has a current yield of approximately 3.73% using the referenced share price. Another useful metric is yield on cost, which compares the current annual dividend to the original purchase price.
Using the 2006 purchase price of $49.13 per share, the current annualized dividend of $4.56 implies a yield on cost of 7.59%.
In formula form:
Yield on cost = current annual dividend per share / original purchase price per share
For long-term holders, yield on cost can help illustrate how dividend growth changes the income profile of an investment over time. It is not a valuation measure for new buyers, but it is a useful way to understand how an older position has matured.
Key Takeaways From a 20-Year TGT Investment
- A $10,000 investment in Target in May 2006 grew to $41,102.24 by May 2026.
- The total return was 310.93%.
- The average annual return was 7.32%.
- Reinvested dividends increased the share count from 203.54 to 335.92 shares.
- Cumulative dividends paid over the period totaled $46.04 per share.
- At a current annualized dividend of $4.56, the yield on original cost is 7.59%.
The broader lesson is straightforward: a long holding period in a durable dividend payer can produce respectable compounding even when returns are not linear and even when the stock experiences multiple business and market cycles along the way.
“Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market.” — Warren Buffett
