Abstract Hyphenated compounds have largely been neglected in the studies of compounding, which have seldom analysed compounds in context. In this study, we argue that the hyphen use in compounds is strongly motivated. Hyphenation is used when words form a unit, which reduces the possibility of parsing them into separate units or other forms. The current study adopts a new perspective on contextual factors, namely, which part of speech (PoS) the compound as a whole belongs to and how people correctly parse a compound into a unit. This process can be observed and analysed by considering examples. This study therefore holds that hyphenation might have gradually become a compounding technique that differs from general compounding principles. To better understand hyphenated compounds and the motivation for using hyphenation, we conduct a quantitative investigation into their distribution frequency to explore how English hyphenated compounds have been used in over the last 200 years. Diachronic change in the frequency of the distribution for compounds has seldom been considered. This question is explored by using frequency data obtained from the three databases that contain hyphenated compounds. Diachronic analysis shows that the frequencies of tokens and types in hyphenated compounds have been increasing, and changes in both frequencies follow the S-curve model. Historical evidence shows that hyphenation in compounds, as an orthographic form, does not seem to disappear easily. Familiarity and economy, as suggested in the cognitive studies of compounding, cannot adequately explain this phenomenon. The three databases that we used provide cross-verification that suggests that hyphenation has evolved into a compounding technique. Language users probably unconsciously take advantage of the discriminative learning model to remind themselves that these combinations should be parsed differently. Thus the hyphenation compounding technique facilitates communication efficiency. Overall, this study significantly enhances our understanding of the nature of compounding, the motivations for using hyphenation, and its cognitive processing.