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“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”

— Warren Buffett

The above quote from Warren Buffett is timeless, and brings into focus the choice about time horizon that any investor should think about before buying a stock they are considering. Behind every stock is an actual business; what will that business look like over a ten year period?

Today, let’s look backwards in time to 2011, and take a look at what happened to investors who asked that very question about American International Group Inc (NYSE: AIG), by taking a look at the investment outcome over a ten year holding period.

Start date: 09/15/2011


End date: 09/14/2021
Start price/share: $25.04
End price/share: $54.43
Starting shares: 399.36
Ending shares: 475.36
Dividends reinvested/share: $8.55
Total return: 158.74%
Average annual return: 9.97%
Starting investment: $10,000.00
Ending investment: $25,880.25

The above analysis shows the ten year investment result worked out well, with an annualized rate of return of 9.97%. This would have turned a $10K investment made 10 years ago into $25,880.25 today (as of 09/14/2021). On a total return basis, that’s a result of 158.74% (something to think about: how might AIG shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that American International Group Inc paid investors a total of $8.55/share in dividends over the 10 holding period, marking a second component of the total return beyond share price change alone. Much like watering a tree, reinvesting dividends can help an investment to grow over time — for the above calculations we assume dividend reinvestment (and for this exercise the closing price on ex-date is used for the reinvestment of a given dividend).

Based upon the most recent annualized dividend rate of 1.28/share, we calculate that AIG has a current yield of approximately 2.35%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.28 against the original $25.04/share purchase price. This works out to a yield on cost of 9.38%.

Here’s one more great investment quote before you go:
“History provides a crucial insight regarding market crises: they are inevitable, painful and ultimately surmountable.” — Shelby Davis