“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 sharply illustrate the power of compounding, especially when both share-price appreciation and dividend reinvestment work in the same direction. For Broadcom Inc (NASD: AVGO), that long-term outcome has been extraordinary. A $10,000 investment made in AVGO on 06/16/2016 would have grown to $323,458.88 by 06/15/2026, assuming dividends were reinvested.
| Start date: | 06/16/2016 |
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| End date: | 06/15/2026 | ||||
| Start price/share: | $15.86 | ||||
| End price/share: | $393.94 | ||||
| Starting shares: | 630.52 | ||||
| Ending shares: | 821.02 | ||||
| Dividends reinvested/share: | $14.55 | ||||
| Total return: | 3,134.34% | ||||
| Average annual return: | 41.56% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $323,458.88 | ||||
AVGO 10-Year Return at a Glance
Using the figures above, Broadcom delivered a gain of more than 32 times the original investment value over the 10-year period. On a total return basis, including reinvested dividends, the result was 3,134.34%, equal to an annualized return of 41.56%. [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
That outcome reflects two separate drivers:
- substantial capital appreciation in AVGO shares, from $15.86 to $393.94; and
- cash dividends that were reinvested into additional shares over time.
How Dividend Reinvestment Affected the Result
Broadcom paid $14.55 per share in dividends across the measurement period. Under a dividend reinvestment approach, those distributions were used to purchase additional AVGO shares, increasing the share count from 630.52 to 821.02. That means the investor ended the period with roughly 30% more shares than at the start, which materially amplified the effect of the stock’s price appreciation.
This is the core mechanical advantage of dividend reinvestment: when distributions buy additional shares, future gains and future dividends are earned on a larger base. Over short periods, the effect may look modest. Over a decade, it can become significant.
Price Return vs. Total Return
For AVGO, the distinction between price return and total return matters. The stock’s share price rose dramatically over the period, but the total return was higher because the analysis assumes dividends were reinvested rather than taken in cash. Looking only at the share price would understate the full economic result.
In practical terms:
- Price return measures the change in the stock price alone.
- Total return includes both stock-price appreciation and dividends, with reinvestment assumptions where applicable.
- Annualized return converts the full-period result into a yearly compounded rate, making long-term performance easier to compare across investments.
Current Yield and Yield on Cost
Based on the most recent annualized dividend rate of $2.60 per share, AVGO has a current dividend yield of approximately 0.66% using the ending share price of $393.94.
Another useful lens is yield on cost, which compares the current annualized dividend to the original purchase price. Using the 2016 starting price of $15.86 per share, the current $2.60 annualized dividend implies a yield on cost of about 16.39%.
That figure is distinct from the stock’s current market yield. Current yield tells you what a new buyer earns at today’s price. Yield on cost shows how dividend growth has changed the income profile for a long-term holder relative to the original entry price.
What the AVGO Example Illustrates
Broadcom’s 10-year return demonstrates how exceptional long-term equity results often come from the interaction of three elements: earnings growth reflected in the stock price, a disciplined capital-return program through dividends, and time. When those forces compound together for a decade, the ending value can diverge sharply from the initial investment.
It also underscores why total return analysis is essential when evaluating dividend-paying stocks. For long holding periods, reinvested distributions can have a meaningful impact on ending wealth, even when the dividend yield itself appears modest at a given point in time.
“The person who starts simply with the idea of getting rich won’t succeed; you must have a larger ambition.” — John Rockefeller
