“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 MGM Resorts International (NYSE: MGM)? Today, we examine the outcome of a ten year investment into the stock back in 2013.
| Start date: | 07/11/2013 |
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| End date: | 07/10/2023 | ||||
| Start price/share: | $15.26 | ||||
| End price/share: | $45.50 | ||||
| Starting shares: | 655.31 | ||||
| Ending shares: | 694.65 | ||||
| Dividends reinvested/share: | $1.62 | ||||
| Total return: | 216.06% | ||||
| Average annual return: | 12.19% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $31,599.36 | ||||
The above analysis shows the ten year investment result worked out quite well, with an annualized rate of return of 12.19%. This would have turned a $10K investment made 10 years ago into $31,599.36 today (as of 07/10/2023). On a total return basis, that’s a result of 216.06% (something to think about: how might MGM shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that MGM Resorts International paid investors a total of $1.62/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 .01/share, we calculate that MGM has a current yield of approximately 0.02%. 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 $15.26/share purchase price. This works out to a yield on cost of 0.13%.
Another great investment quote to think about:
“The four most dangerous words in investing are: ‘this time it’s different.'” — Sir John Templeton
