“I buy on the assumption that they could close the market the next day and not reopen it for five years.”
— Warren Buffett
Simon Property Group, Inc. (NYSE: SPG) delivered a strong five-year total return for investors who bought shares in May 2021 and reinvested dividends along the way. Over that holding period, a $10,000 investment grew to $21,068.24, illustrating how price appreciation and dividend reinvestment can combine to drive long-term returns in a real estate investment trust, or REIT.
The exercise is straightforward: start with a fixed investment on 05/26/2021, track the share price through 05/22/2026, and assume all dividends are reinvested. That framework highlights a key point in income investing: for dividend-paying stocks such as Simon Property Group, total return often tells a more complete story than share price alone.
SPG 5-Year Return Details
| Start date: | 05/26/2021 |
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| End date: | 05/22/2026 | ||||
| Start price/share: | $126.70 | ||||
| End price/share: | $204.41 | ||||
| Starting shares: | 78.93 | ||||
| Ending shares: | 103.05 | ||||
| Dividends reinvested/share: | $37.75 | ||||
| Total return: | 110.64% | ||||
| Average annual return: | 16.10% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $21,068.24 | ||||
What Drove Simon Property Group’s Total Return?
The headline result is clear: Simon Property Group more than doubled an initial $10,000 investment over the five-year period measured here. Using the figures above, the investment produced a 110.64% total return, equivalent to a 16.10% annualized return, assuming dividends were reinvested.
That outcome came from two sources:
- Share price appreciation from $126.70 to $204.41
- Cash dividends totaling $37.75 per share over the period, reinvested into additional shares
Reinvestment materially affected the ending value. The original position of 78.93 shares grew to 103.05 shares by the end of the period, which demonstrates the compounding effect created when distributions buy additional shares over time.
In short, SPG’s five-year result was not simply a story of multiple expansion or stock price recovery. It was also a case study in how a high-quality income stream can enhance long-horizon equity returns when distributions are consistently reinvested.
Why Dividend Reinvestment Matters for REIT Returns
For REITs, dividend policy is central to the investment case. Because REIT structures are designed to distribute a substantial portion of taxable income, a meaningful share of long-term returns can come from dividends rather than price appreciation alone. That makes total return analysis especially important when evaluating companies such as Simon Property Group.
In this case, the calculations assume dividends were reinvested at the closing price on the ex-date, as reflected by the Dividend Channel DRIP Returns Calculator. That approach provides a practical way to model how investors who participate in a dividend reinvestment plan can build a larger share count over time.
The distinction matters. An investor who spent dividends rather than reinvesting them would still have received meaningful cash income, but the ending market value of the position would have been lower because the share count would not have increased from 78.93 to 103.05.
Current Yield and Yield on Cost
Based upon the most recent annualized dividend rate of $9.00 per share, SPG has a current yield of approximately 4.40% using the ending share price of $204.41. That is the forward annual dividend divided by the current market price.
A separate measure, yield on cost, compares today’s annualized dividend with the original purchase price. Using the 05/26/2021 starting price of $126.70 per share, the current $9.00 annualized dividend implies a yield on cost of about 7.10%.
This is an important distinction:
- Current yield measures income relative to today’s share price
- Yield on cost measures income relative to the original purchase price
For long-term holders, yield on cost can rise over time when a company increases its dividend and the investor’s entry price remains fixed. In this case, the original draft understated that figure; based on the numbers presented, 3.47% does not match the stated dividend rate and purchase price.
What the Five-Year Performance Suggests
Simon Property Group is one of the largest publicly traded retail REITs, with a portfolio centered on malls, premium outlets, and other retail-focused properties. That context is relevant to the five-year return profile. In 2021, investors were still assessing the durability of brick-and-mortar retail real estate after the pandemic shock, the pace of tenant recovery, rent collections, and the normalization of consumer traffic. Over the following years, the market’s view of high-quality retail real estate improved materially, and SPG’s total return reflects that shift.
For investors studying historical outcomes, the main lesson is less about backward-looking celebration and more about framework. A five-year holding period can produce strong compounding when three conditions align:
- The underlying business remains fundamentally resilient
- The dividend stream stays substantial and investable
- Valuation and operating performance improve over time
SPG’s result over this period checks all three boxes. The stock appreciated, the income stream was meaningful, and reinvestment amplified the final outcome.
More investment wisdom to ponder:
“The ideal business is one that earns very high returns on capital and that keeps using lots of capital at those high returns. That becomes a compounding machine.” — Warren Buffett
