“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— Warren Buffett
NiSource Inc. (NYSE: NI) offers a useful case study in long-term utility investing. For investors who bought NiSource stock in 2016 and held it for a full decade, the combination of share-price appreciation and reinvested dividends produced a solid total return. The result illustrates a familiar feature of regulated utility stocks: while they are not typically associated with rapid growth, compounding through dividends can materially improve long-term outcomes.
NiSource 10-Year Return Summary
| Start date: | 07/29/2016 |
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| End date: | 07/28/2026 | ||||
| Start price/share: | $25.66 | ||||
| End price/share: | $45.73 | ||||
| Starting shares: | 389.71 | ||||
| Ending shares: | 531.65 | ||||
| Dividends reinvested/share: | $8.89 | ||||
| Total return: | 143.12% | ||||
| Average annual return: | 9.29% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $24,317.00 | ||||
A $10,000 investment in NiSource on 07/29/2016 would have grown to $24,317.00 by 07/28/2026, assuming dividends were reinvested. That equates to a total return of 143.12% and an average annual return of 9.29%.
Those figures matter because they show that a meaningful share of long-term performance came not only from the stock rising from $25.66 to $45.73, but also from the accumulation of additional shares through dividend reinvestment. Starting with 389.71 shares, the position grew to 531.65 shares over the period. In other words, compounding increased the share count by more than one-third before considering the higher ending share price.
[These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Why Dividend Reinvestment Matters
For dividend-paying utilities, total return and price return can diverge significantly over long holding periods. NiSource paid $8.89 per share in cumulative dividends over the period used in this analysis. When those cash payments are reinvested on each ex-dividend date, they purchase additional shares, which then generate dividends of their own. That mechanism is central to how many utility investments compound over time.
In concise terms, the benefit of dividend reinvestment comes from three effects:
- cash distributions add to return even when price appreciation is modest;
- reinvested dividends increase the number of shares owned;
- future dividends are then paid on a larger share base.
This is especially relevant in sectors such as regulated gas and electric utilities, where earnings growth is often steadier than spectacular and a substantial part of shareholder return can come from income.
Current Yield and Yield on Cost
Based on the most recent annualized dividend rate of $1.20 per share, NI has a current yield of approximately 2.62% using the ending share price of $45.73.
Another useful measure is yield on cost, which compares the current annualized dividend to the original purchase price. Using the 2016 entry price of $25.66 per share, the current dividend rate implies a yield on cost of about 4.68%.
That distinction is important. Current yield reflects what a new buyer earns at today’s market price. Yield on cost reflects how the income stream has evolved for a long-term holder. For investors focused on dividend growth and income durability, both metrics can be informative, but they answer different questions.
What the 10-Year Result Suggests
The main takeaway from NiSource’s 10-year return is that patient ownership of a dividend-paying utility can produce respectable compounded returns without requiring aggressive underlying growth assumptions. A 9.29% annualized return over a decade is not extraordinary in absolute terms, but it is strong enough to more than double the original capital with dividends reinvested.
It also underscores a broader point about stock selection in defensive sectors: entry valuation, dividend consistency, and the ability to reinvest cash flows can matter as much as headline growth. For long-duration holdings, the interaction between dividend policy and share accumulation often determines whether returns merely track the underlying business or materially exceed the simple change in stock price.
One more piece of investment wisdom is worth keeping in view:
“Markets are constantly in a state of uncertainty and flux and money is made by discounting the obvious and betting on the unexpected.” — George Soros
