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“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”

— Warren Buffett

A long-term investment in Cintas Corporation (NASD: CTAS) offers a clear illustration of how buy-and-hold investing can create substantial wealth through share-price appreciation and dividend reinvestment. Starting with a $10,000 investment in 2006 and holding for roughly twenty years, an investor would have seen that position grow dramatically, underscoring the effect of disciplined ownership over an extended period.

The central lesson is not simply that CTAS performed well. It is that long-duration compounding can be exceptionally powerful when a business delivers sustained operating execution, expands earnings over time, and returns capital to shareholders through dividends.

CTAS 20-Year Return Details

CTAS 20-Year Return Details
Start date:	11/03/2006	$10,000 11/03/2006   $288,731 11/02/2026
End date:	11/02/2026
Start price/share:	$10.22
End price/share:	$224.77
Starting shares:	978.47
Ending shares:	1,285.51
Dividends reinvested/share:	$12.22
Total return:	2,789.44%
Average annual return:	18.30%
Starting investment:	$10,000.00
Ending investment:	$288,731.87

The result is striking. A $10,000 investment in Cintas on 11/03/2006 would have grown to $288,731.87 by 11/02/2026, assuming dividends were reinvested. That equates to a total return of 2,789.44% and an annualized return of 18.30%. [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

What Drove the Long-Term CTAS Return?

CTAS did not produce this outcome through dividend income alone. The primary driver was long-term business growth reflected in the stock price, with dividend reinvestment adding a meaningful secondary layer of compounding. Over a twenty-year holding period, both elements matter:

• Share-price appreciation: the stock rose from $10.22 to $224.77 per share.
• Dividend reinvestment: cash distributions bought additional shares over time, increasing the share count from 978.47 to 1,285.51.
• Time: the extended holding period allowed returns to build on prior returns, which is the core mechanism of compounding.

This is an important distinction. Many successful long-term investments are not necessarily high-yield stocks at the outset. Instead, they are businesses that can steadily expand revenue, margins, cash flow, and dividends over many years. When that happens, even a modest starting yield can contribute meaningfully to total return.

The Role of Dividend Reinvestment

Cintas paid a cumulative $12.22 per share in dividends over the period analyzed. When those dividends are reinvested, the investor ends up owning more shares than were purchased initially. In this case, the share count increased by more than 300 shares, from 978.47 to 1,285.51.

That additional ownership matters because each reinvested share participates in future price appreciation and future dividends. Over long stretches, this can materially increase ending wealth even when the dividend yield appears relatively low in any single year.

For the calculations above, dividends are assumed to be reinvested into additional shares at the closing price on the ex-date.

Current Yield vs. Yield on Cost

Based on the most recent annualized dividend rate of $2.08 per share, CTAS has a current yield of approximately 0.93%. On its face, that is a modest yield. However, long-term holders often evaluate another metric: yield on cost.

Yield on cost measures the current annual dividend against the original purchase price. Using the original purchase price of $10.22 per share, the current $2.08 annualized dividend translates to a yield on cost of approximately 9.10%.

In concise terms:

• Current yield = current annual dividend / current share price
• Yield on cost = current annual dividend / original purchase price

Yield on cost does not determine what a stock is worth today, but it does highlight how dividend growth can reward patience. For long-held compounders, a low initial yield can eventually become a substantial income stream relative to the original capital committed.

Why Long Holding Periods Matter

The broader takeaway from CTAS is that buy-and-hold investing remains highly relevant when applied to durable businesses over sufficiently long periods. A long holding period does three things at once: it reduces the need for precise short-term market timing, gives business performance time to show through in the stock price, and allows dividends to compound through reinvestment.

It also changes how an investment should be evaluated. Over months or even a few years, sentiment and valuation shifts can dominate returns. Over decades, the underlying economics of the business usually matter much more. In that context, sustained execution and disciplined capital allocation become the key variables.

One more investment quote captures that discipline well:
“Every day that you’re not selling an asset in your portfolio, you’re choosing to buy it.” — Sam Zell