“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 is a useful test of how a business compounds value through both share-price appreciation and dividends. For Smith (A O) Corp (NYSE: AOS), the results show a positive but measured long-term total return. A $10,000 investment made on 07/15/2016 and held through 07/14/2026, with dividends reinvested, grew to $15,831.48.
That works out to a total return of 58.26% and an average annual return of 4.70%. The outcome is notable because it illustrates a key point in dividend investing: even when capital gains are moderate, reinvested dividends can meaningfully increase ending value and share count over time.
AOS 10-Year Return Details
| Start date: | 07/15/2016 |
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| End date: | 07/14/2026 | ||||
| Start price/share: | $45.48 | ||||
| End price/share: | $60.87 | ||||
| Starting shares: | 219.88 | ||||
| Ending shares: | 260.00 | ||||
| Dividends reinvested/share: | $10.26 | ||||
| Total return: | 58.26% | ||||
| Average annual return: | 4.70% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $15,831.48 | ||||
The calculation above assumes dividends were reinvested on each ex-dividend date at the closing price, increasing the share count from 219.88 to 260.00 over the holding period. In other words, the ending value reflects both the stock’s price gain and the compounding effect of reinvested cash distributions. [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
What Drove the Return?
Over the period examined, A. O. Smith’s share price rose from $45.48 to $60.87. That price appreciation contributed meaningfully to total return, but the full result was stronger because the investment also generated $10.26 per share in reinvested dividends over the 10-year span.
This distinction matters. Price return measures only the change in the stock price. Total return captures the complete shareholder experience by adding dividends and, in this case, assuming those dividends were reinvested into additional shares. For dividend-paying stocks, total return is typically the more informative figure.
At a Glance
- $10,000 invested in AOS on 07/15/2016 became $15,831.48 by 07/14/2026.
- Total return was 58.26%.
- Annualized return was 4.70%.
- Reinvested dividends increased the share count from 219.88 to 260.00.
Dividend Yield and Yield on Cost
Based on the most recent annualized dividend rate of $1.44 per share, AOS has a current yield of approximately 2.37% using the ending share price of $60.87. A second useful metric is yield on cost, which compares the current annualized dividend to the original purchase price rather than the current market price.
Using the original entry price of $45.48 per share, the current $1.44 annualized dividend implies a yield on cost of 3.17%. That figure is different from current yield because it is anchored to the investor’s initial purchase price rather than today’s valuation.
What Is Yield on Cost?
Yield on cost is the current annual dividend divided by the original purchase price per share.
Formula: Current annual dividend ÷ original cost basis per share
For this example: $1.44 ÷ $45.48 = 3.17%
How to Interpret the 10-Year AOS Result
A 4.70% annualized return over a full market cycle is positive, but it also indicates that the investment produced a moderate rate of compounding rather than an exceptional one. For long-horizon investors, that invites a closer look at the business’s earnings growth, capital allocation, valuation at the entry point, and the sustainability of dividend growth.
It also underscores why starting valuation matters. Even durable industrial businesses can produce only average investment results if purchased at a full multiple or if earnings growth does not materially outpace expectations over time. In that sense, the AOS outcome is a reminder that business quality and shareholder return are related, but not identical.
One final investing principle is worth keeping in view:
“We don’t have to be smarter than the rest. We have to be more disciplined than the rest.” — Warren Buffett
