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“Someone’s sitting in the shade today because someone planted a tree a long time ago.”

— Warren Buffett

The Warren Buffett investment philosophy calls for a long-term investment horizon, where a twenty 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 twenty year investment into the stock back in 2004.

Start date: 04/02/2004


End date: 04/01/2024
Start price/share: $23.39
End price/share: $47.78
Starting shares: 427.53
Ending shares: 453.20
Dividends reinvested/share: $1.62
Total return: 116.54%
Average annual return: 3.94%
Starting investment: $10,000.00
Ending investment: $21,666.67

As shown above, the twenty year investment result worked out as follows, with an annualized rate of return of 3.94%. This would have turned a $10K investment made 20 years ago into $21,666.67 today (as of 04/01/2024). On a total return basis, that’s a result of 116.54% (something to think about: how might MGM shares perform over the next 20 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 20 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 0.00%. 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 $23.39/share purchase price. This works out to a yield on cost of 0.00%.

One more investment quote to leave you with:
“If you can follow only one bit of data, follow the earnings.” — Peter Lynch