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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 Warren Buffett investment philosophy calls for a long-term investment horizon, where a ten year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into American Airlines Group Inc (NASD: AAL)? Today, we examine the outcome of a ten year investment into the stock back in 2012.

Start date: 07/20/2012


End date: 07/19/2022
Start price/share: $12.01
End price/share: $15.16
Starting shares: 832.64
Ending shares: 883.35
Dividends reinvested/share: $2.30
Total return: 33.92%
Average annual return: 2.96%
Starting investment: $10,000.00
Ending investment: $13,388.13

The above analysis shows the ten year investment result worked out as follows, with an annualized rate of return of 2.96%. This would have turned a $10K investment made 10 years ago into $13,388.13 today (as of 07/19/2022). On a total return basis, that’s a result of 33.92% (something to think about: how might AAL shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]

Notice that American Airlines Group Inc paid investors a total of $2.30/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 .4/share, we calculate that AAL has a current yield of approximately 2.64%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of .4 against the original $12.01/share purchase price. This works out to a yield on cost of 21.98%.

One more investment quote to leave you with:
“October is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” — Mark Twain