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“I buy on the assumption that they could close the market the next day and not reopen it for five years.”

— Warren Buffett

The Warren Buffett investment philosophy calls for a long-term investment horizon, where a five year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into MGM Resorts International (NYSE: MGM)? Today, we examine the outcome of a five year investment into the stock back in 2017.

Start date: 06/26/2017


End date: 06/23/2022
Start price/share: $33.85
End price/share: $27.17
Starting shares: 295.42
Ending shares: 310.72
Dividends reinvested/share: $1.40
Total return: -15.58%
Average annual return: -3.33%
Starting investment: $10,000.00
Ending investment: $8,443.82

As shown above, the five year investment result worked out poorly, with an annualized rate of return of -3.33%. This would have turned a $10K investment made 5 years ago into $8,443.82 today (as of 06/23/2022). On a total return basis, that’s a result of -15.58% (something to think about: how might MGM shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that MGM Resorts International paid investors a total of $1.40/share in dividends over the 5 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 .01/share, we calculate that MGM has a current yield of approximately 0.04%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .01 against the original $33.85/share purchase price. This works out to a yield on cost of 0.12%.

Another great investment quote to think about:
“People who succeed in the stock market also accept periodic losses, setbacks, and unexpected occurrences. Calamitous drops do not scare them out of the game.” — Peter Lynch