“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— Warren Buffett
A 20-year buy-and-hold investment in ONEOK Inc (NYSE: OKE) illustrates how long-term equity returns can be driven by both share-price appreciation and dividend reinvestment. Looking back to 2006, the stock delivered a strong compounded outcome for investors who held through multiple market cycles and reinvested cash distributions along the way.
That framing matters with a company like ONEOK. As a large U.S. midstream energy business, its investment case has historically combined income generation with exposure to long-duration infrastructure assets tied to natural gas and natural gas liquids. Over long holding periods, that mix can produce materially different results than a strategy focused only on near-term price moves.
OKE 20-Year Return Details
| Start date: | 06/02/2006 |
|
|||
| End date: | 06/01/2026 | ||||
| Start price/share: | $15.23 | ||||
| End price/share: | $84.95 | ||||
| Starting shares: | 656.60 | ||||
| Ending shares: | 1,793.12 | ||||
| Dividends reinvested/share: | $48.06 | ||||
| Total return: | 1,423.26% | ||||
| Average annual return: | 14.58% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $152,343.57 | ||||
What the 20-Year Return Means
Over the period from 06/02/2006 through 06/01/2026, a $10,000 investment in ONEOK grew to $152,343.57 with dividends reinvested. That equates to a total return of 1,423.26% and an average annual return of 14.58%.
The key point is that the result did not come from price appreciation alone. The starting share count of 656.60 grew to 1,793.12 shares, underscoring the effect of reinvesting distributions over time. In other words, the ending value reflects two layers of compounding: the stock price increased from $15.23 to $84.95, and the investor accumulated additional shares as dividends were reinvested.
[These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Why Dividend Reinvestment Matters
ONEOK paid a cumulative $48.06 per share in dividends over the 20-year period measured above. For a dividend-paying stock, that cash flow can be a meaningful part of total return. Reinvestment converts those cash payments into incremental ownership, allowing future dividends to be earned on a larger share base.
That mechanism is especially important over long holding periods. Even when annual dividend yields appear moderate in a single year, the repeated reinvestment of distributions can materially increase ending wealth. The calculations above assume dividends were reinvested using the closing price on the ex-date, which provides a practical illustration of how a DRIP-style approach compounds over time.
- Initial investment: $10,000
- Ending value: $152,343.57
- Total return: 1,423.26%
- Annualized return: 14.58%
- Total dividends paid per share over the period: $48.06
- Ending share count with reinvestment: 1,793.12
Current Yield and Yield on Cost
Based on the most recent annualized dividend rate of $4.28 per share, OKE has a current yield of approximately 5.04% using the $84.95 ending share price shown above. Current yield measures the dividend relative to the stock’s recent market price and is the standard way to compare income characteristics across securities at a point in time.
A different concept is yield on cost, which compares the current annual dividend to the original purchase price. Using the same $4.28 annualized dividend against the 2006 entry price of $15.23 per share, the yield on cost works out to 28.10%.
Yield on cost can be useful for illustrating how dividend growth and a low historical cost basis interact over time. It is not, however, a valuation metric for new capital. For a current buyer, the relevant income measure remains the stock’s current yield at today’s market price.
A Longer-Term Perspective on ONEOK
ONEOK’s 20-year buy-and-hold performance highlights a broader principle in income investing: total return is often strongest when durable cash-generating businesses combine distribution payments with the capacity to grow through cycles. Midstream operators can be volatile, particularly when energy markets reprice risk, but their long-lived asset bases and fee-oriented business lines can support substantial cash returns to shareholders over time.
That does not imply a smooth path. A two-decade holding period in an energy-related stock would have included commodity shocks, credit stress, changing rate environments, and shifting investor sentiment toward income-oriented equities. The significance of the result above is therefore not that volatility disappeared, but that compounding ultimately dominated it.
One more piece of investment wisdom to leave you with:
“Cash combined with courage in a time of crisis is priceless.” — Warren Buffett
