“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, fits neatly into the strategy of letting business value compound over time. For investors who embraced that mindset with MGM Resorts International (NYSE: MGM), how would a patient, buy-and-hold approach from 2021 through early 2026 have played out?
MGM Resorts International is a global gaming and hospitality company best known for its flagship properties on the Las Vegas Strip — including Bellagio, MGM Grand, and Mandalay Bay — as well as its regional U.S. casino resorts and a growing presence in Macau through MGM China. The company emerged from the acute phase of the COVID-19 pandemic facing a sharp recovery in travel and leisure demand, while simultaneously reshaping its balance sheet and asset base through real estate monetizations and strategic partnerships.
Against that backdrop, we examine the outcome of a five-year investment in MGM shares, assuming a hypothetical 10000 initial allocation in 2021.
| Start date: | 03/25/2021 |
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| End date: | 03/24/2026 | ||||
| Start price/share: | $37.96 | ||||
| End price/share: | $37.11 | ||||
| Starting shares: | 263.44 | ||||
| Ending shares: | 263.58 | ||||
| Dividends reinvested/share: | $0.02 | ||||
| Total return: | -2.19% | ||||
| Average annual return: | -0.44% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $9,781.93 | ||||
As shown above, the five-year investment result worked out poorly in capital terms, with an annualized rate of return of -0.44%. That would have turned a 10000 investment made five years ago into $9,781.93 as of 03/24/2026, based on closing prices and assuming dividends were reinvested. On a total return basis, that translates into a loss of -2.19%. For investors benchmarking against broad U.S. equity indices, this five-year outcome lagged the performance of the S&P 500 over the same period, underscoring the opportunity cost of single-stock risk when the thesis does not fully play out.
It is important to note that this period for MGM included a transition from pandemic-era disruption to a more normalized operating environment. The company benefited from a sharp rebound in Las Vegas visitation and strong convention and group business, while at the same time contending with interest rate volatility, macroeconomic uncertainty, and varying conditions across its regional and Macau portfolios. Additionally, MGM has been active in reshaping its capital structure, including real estate transactions with MGM Growth Properties and VICI Properties, and returning capital to shareholders via share repurchases. Those actions can influence per-share metrics over time even when the headline share price appears relatively flat.
From a total-return perspective, dividends were a very small contributor over this specific holding window. MGM Resorts International paid investors a total of $0.02 per share in dividends over the five-year holding period, marking a second component of return beyond share price change alone, but one that was economically negligible compared with price fluctuations. Much like watering a tree, reinvesting dividends can help an investment grow over time — but for income-oriented investors evaluating MGM, the company’s profile over this stretch has been far more geared toward capital returns through buybacks rather than cash income via dividends.
For the calculations above, we assume full dividend reinvestment, and we use the closing price on the ex-dividend date for the reinvestment of a given dividend. The modest increase in share count from 263.44 to 263.58 shares reflects that reinvestment effect in a low-yield context.
Based upon the most recent annualized dividend rate of .01 per share, we calculate that MGM has a current yield of approximately 0.00% when rounded to two decimal places. Another interesting datapoint to examine is “yield on cost” — in other words, expressing the current annualized dividend of .01 per share against the original $37.96 per-share purchase price. This works out to a yield on cost of 0.00% as well when rounded, reinforcing that MGM’s investment appeal over this period has been driven primarily by expectations for earnings power, asset values, and capital allocation rather than by dividend income.
For long-term, Buffett-style investors, the MGM case study highlights several considerations:
- Sector cyclicality matters: gaming and hospitality earnings are highly sensitive to discretionary spending, travel trends, and macro conditions.
- Starting valuation is critical: buying after a sharp recovery in expectations can leave less room for multiple expansion to drive returns.
- Capital allocation focus: companies that prioritize buybacks over dividends may still create value, but income-oriented investors need to calibrate expectations accordingly.
- Time horizon alone is not a guarantee: holding for five years is consistent with a long-term approach, but underlying business performance and valuation ultimately drive results.
How MGM shares perform over the next five years will depend on factors such as the trajectory of U.S. and Macau gaming demand, competitive dynamics on the Las Vegas Strip, the evolution of digital and sports betting initiatives (including partnerships in online gaming), and management’s ongoing capital allocation between debt reduction, reinvestment, and shareholder returns.
One more investment quote to leave you with:
“Never test the depth of a river with both feet.” — Warren Buffett
For investors considering MGM or any single-stock position, that aphorism underscores the importance of diversification, position sizing, and a disciplined approach to risk.
