“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— Warren Buffett
A 10-year holding period can be a useful test of whether a stock has created value through both capital appreciation and income. For CVS Health Corporation (NYSE: CVS), a $10,000 investment made on 06/08/2016 and held through 06/05/2026 would have grown to $13,256.58 with dividends reinvested. That equates to a total return of 32.53% and an average annual return of 2.86%.
The result is notable because CVS produced a positive total return even though the share price itself was slightly lower at the end of the period than at the start. In other words, the investment outcome was driven primarily by dividends and the compounding effect of reinvestment rather than by multiple expansion or sustained price appreciation.
CVS 10-Year Return Details
| Start date: | 06/08/2016 |
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| End date: | 06/05/2026 | ||||
| Start price/share: | $98.31 | ||||
| End price/share: | $95.93 | ||||
| Starting shares: | 101.72 | ||||
| Ending shares: | 138.16 | ||||
| Dividends reinvested/share: | $22.12 | ||||
| Total return: | 32.53% | ||||
| Average annual return: | 2.86% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $13,256.58 | ||||
What Drove the Return?
At first glance, the period looks underwhelming from a price-only perspective. CVS shares started at $98.31 and ended at $95.93, meaning the stock price alone did not generate the gain. The positive outcome came from cash distributions along the way and the purchase of additional shares through dividend reinvestment.
That is evident in the share count. A $10,000 investment initially bought 101.72 shares, but the position grew to 138.16 shares by the end of the period. The increase reflects the compounding effect of reinvesting dividends at prevailing market prices over time.
In practical terms, this is why total return is the more useful measure for dividend-paying stocks. Looking only at the share price would miss a substantial portion of the economic return generated over the holding period.
Key Takeaways From the CVS Investment
- A $10,000 investment grew to $13,256.58 over roughly 10 years.
- Total return was 32.53%, including reinvested dividends.
- Average annual return was 2.86%.
- The ending share price was below the starting share price, underscoring the importance of dividend income.
- Reinvestment increased the share count from 101.72 to 138.16 shares.
Dividend Income, Reinvestment, and Yield on Cost
Over the period analyzed above, CVS paid $22.12 per share in dividends that were assumed to be reinvested. In this framework, each dividend payment is used to purchase additional shares based on the closing price on the ex-dividend date. That assumption matters because reinvestment can materially change long-run results, especially when share prices are volatile or stagnant.
Based upon the most recent annualized dividend rate of $2.66 per share, CVS has a current yield of approximately 2.77%. Another useful metric is yield on cost, which compares the current annualized dividend to the original purchase price of $98.31 per share. On that basis, the yield on cost is approximately 2.82%.
Yield on cost does not measure current valuation, but it does help show how the cash income stream on an original investment has evolved. For long-term holders of dividend stocks, that can be a helpful complement to total return analysis.
Why the Distinction Between Price Return and Total Return Matters
CVS illustrates a broader point that applies across dividend-paying equities:
- Price return measures only the change in the stock price.
- Total return includes both price movement and dividends, assuming the cash is either collected or reinvested.
- Reinvested dividends can offset weak price performance and, over long periods, can become a major source of compounding.
For mature healthcare and consumer-facing businesses such as CVS, that distinction is especially important. The market may re-rate the shares over time as operating conditions, reimbursement dynamics, strategic acquisitions, leverage, and growth expectations change. Even in periods when valuation compresses, a steady dividend can still contribute meaningfully to investor returns.
[These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Before you go, here is one more investment quote:
“Anyone who is not investing now is missing a tremendous opportunity.” — Carlos Slim
