“I buy on the assumption that they could close the market the next day and not reopen it for five years.”
— Warren Buffett
A five-year holding period can reveal far more about a stock than short-term price movement. In the case of Consolidated Edison Inc (NYSE: ED), the investment result since 2021 shows how a traditionally defensive utility stock can generate meaningful total return through a combination of share-price appreciation and reinvested dividends.
Using a starting date of 08/06/2021 and an ending date of 08/05/2026, a hypothetical $10,000 investment in ED grew to $17,087.20 with dividends reinvested. That equates to a total return of 70.86% and an average annual return of 11.31%.
ED Five-Year Return Summary
| Start date: | 08/06/2021 |
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| End date: | 08/05/2026 | ||||
| Start price/share: | $75.52 | ||||
| End price/share: | $108.32 | ||||
| Starting shares: | 132.42 | ||||
| Ending shares: | 157.74 | ||||
| Dividends reinvested/share: | $16.45 | ||||
| Total return: | 70.86% | ||||
| Average annual return: | 11.31% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $17,087.20 | ||||
The result is notable because it came from a regulated electric and gas utility rather than a high-growth business. Consolidated Edison has long been viewed as an income-oriented equity, and this period illustrates how a steady dividend payer can still produce double-digit annualized returns when valuation, income, and price appreciation align favorably.
[These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
How the Return Was Generated
ED’s five-year return came from two sources:
- Share-price appreciation: the stock rose from $75.52 to $108.32.
- Dividend income: shareholders received $16.45 per share over the period, with the calculation assuming reinvestment into additional shares.
That reinvestment matters. The starting position of 132.42 shares increased to 157.74 shares by the end of the period, demonstrating the compounding effect of using cash distributions to purchase additional stock over time. In lower-growth sectors such as utilities, reinvested dividends can account for a substantial share of total return.
Why Dividends Matter for Consolidated Edison
Dividends are central to the investment case for Consolidated Edison. Utilities typically operate in capital-intensive, regulated markets that emphasize cash flow durability and income distribution more than rapid earnings expansion. For that reason, analyzing ED solely through price performance would understate the full investment outcome.
Over the five years shown above, Consolidated Edison paid $16.45 per share in dividends. For investors who reinvested those distributions, the income stream not only added directly to return but also increased share ownership, which in turn raised future dividend receipts. That is the essence of dividend compounding.
The calculations above assume dividends were reinvested at the closing price on the ex-date. This provides a practical framework for evaluating total return, especially for stocks where income is a significant component of long-term performance.
Current Yield and Yield on Cost
Based on the most recent annualized dividend rate of $3.55 per share, ED has a current yield of approximately 3.28% using the ending share price of $108.32.
Another useful measure is yield on cost, which compares the current annualized dividend to the original purchase price. Using the 2021 entry price of $75.52, the current $3.55 annualized dividend translates to a yield on cost of 4.34%.
In simple terms:
- Current yield shows what a new buyer may earn at today’s price.
- Yield on cost shows how the income stream has grown relative to the original purchase price.
Yield on cost does not determine present market value, but it can be a useful way to frame the income progression of a long-held dividend position.
What This Five-Year ED Performance Suggests
The five-year outcome highlights several characteristics that often define utility-stock returns:
- Total return can exceed expectations when a stable dividend is paired with even moderate price appreciation.
- Income is a major driver of performance, particularly when dividends are reinvested consistently.
- Time horizon matters, because the compounding effect of dividends becomes more visible over multi-year periods.
That does not mean future returns will resemble the last five years. Utility valuations are sensitive to interest rates, regulatory outcomes, capital spending requirements, and investor appetite for defensive sectors. Still, the historical result provides a clear example of how Consolidated Edison stock has rewarded patient shareholders during this holding period.
“Investors should always keep in mind that the most important metric is not the returns achieved but the returns weighed against the risks incurred. Ultimately, nothing should be more important to investors than the ability to sleep soundly at night.” — Seth Klarman
