“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”
— Warren Buffett
Essex Property Trust Inc (NYSE: ESS) provides a useful case study in long-term REIT investing. A shareholder who bought ESS in July 2006 and held for roughly 20 years, while reinvesting dividends, would have turned a $10,000 investment into approximately $50,034.57 by 07/15/2026. That equates to a total return of 400.77% and an annualized return of 8.38%.
The result is notable because it reflects more than simple share price appreciation. As with many equity REITs, a meaningful portion of total return came from cash distributions. For long holding periods, the combination of dividends and reinvestment can materially change the outcome.
ESS 20-Year Return at a Glance
| Start date: | 07/17/2006 |
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| End date: | 07/15/2026 | ||||
| Start price/share: | $114.15 | ||||
| End price/share: | $292.79 | ||||
| Starting shares: | 87.60 | ||||
| Ending shares: | 171.04 | ||||
| Dividends reinvested/share: | $129.40 | ||||
| Total return: | 400.77% | ||||
| Average annual return: | 8.38% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $50,034.57 | ||||
The above figures show that the investment outcome was strong over the full holding period. A $10,000 purchase made 20 years earlier would have grown to $50,034.57 by 07/15/2026, assuming dividend reinvestment throughout the period. [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Why the Total Return Matters
Looking only at ESS share price performance would understate the economic result. The stock rose from $114.15 to $292.79 over the period, but the investment thesis for a REIT often includes income as a central component. Essex Property Trust distributed a cumulative $129.40 per share in dividends over the period used in this analysis, and those payouts, when reinvested, increased the share count from 87.60 to 171.04.
That change in share count is significant. Reinvestment did not simply add cash flow; it increased ownership over time. In long-duration holdings, that compounding effect can become as important as the underlying change in the share price itself.
Key Takeaways From the ESS Example
For quick reference, the 20-year ESS result highlights three core points:
- Share price appreciation contributed materially, with ESS rising from $114.15 to $292.79.
- Dividends were a major part of the return, totaling $129.40 per share over the period analyzed.
- Dividend reinvestment nearly doubled the share count, from 87.60 shares to 171.04 shares.
Current Dividend Yield and Yield on Cost
Based on the most recent annualized dividend rate of $10.36 per share, ESS has a current yield of approximately 3.54% using the cited ending share price of $292.79. That is the current market yield available at that price level.
It is also useful to distinguish current yield from yield on cost:
- Current yield: annual dividend divided by the current share price.
- Yield on cost: annual dividend divided by the original purchase price.
Using the original purchase price of $114.15 and the current annualized dividend of $10.36, the yield on cost works out to 9.08%. That figure illustrates how a long-term holder can see the income generated on original capital rise over time as dividends increase. It is a backward-looking measure, but it can be a useful way to visualize the income power of a successful long-term holding.
What This Says About Long-Term REIT Ownership
Essex Property Trust operates as an apartment REIT, and residential real estate can offer a combination of recurring rental income, asset value exposure, and dividend distributions. Over a 20-year period, however, the path is rarely linear. A holding that spans 2006 through 2026 necessarily includes multiple market environments, including the global financial crisis, the pandemic-era shock, changing interest-rate conditions, and shifts in property market valuations.
That context matters. A satisfactory long-term result does not imply low volatility along the way. Rather, the ESS example shows how durable income generation and patient reinvestment can offset interim market swings and contribute meaningfully to compounded total return.
Here’s one more investment quote before you go:
“If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.” — Peter Lynch
