“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 two-decade holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into American International Group Inc (NYSE: AIG)? Today, we examine the outcome of a two-decade investment into the stock back in 2005.
| Start date: | 09/15/2005 |
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| End date: | 09/12/2025 | ||||
| Start price/share: | $1,219.00 | ||||
| End price/share: | $78.93 | ||||
| Starting shares: | 8.20 | ||||
| Ending shares: | 13.39 | ||||
| Dividends reinvested/share: | $65.58 | ||||
| Total return: | -89.43% | ||||
| Average annual return: | -10.63% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $1,055.77 | ||||
As we can see, the two-decade investment result worked out poorly, with an annualized rate of return of -10.63%. This would have turned a $10K investment made 20 years ago into $1,055.77 today (as of 09/12/2025). On a total return basis, that’s a result of -89.43% (something to think about: how might AIG shares perform over the next 20 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that American International Group Inc paid investors a total of $65.58/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 1.8/share, we calculate that AIG has a current yield of approximately 2.28%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 1.8 against the original $1219.00/share purchase price. This works out to a yield on cost of 0.19%.
One more investment quote to leave you with:
“Don’t wait for the perfect time, you will wait forever. Always take advantage of the time you’re given and make it perfect.” — Daymond John
