Price return measures how much an investment’s price changes. Total return also counts income, such as dividends. A share-price chart can therefore show a different result from the return earned by someone who held the shares and received dividends.
Key takeaways
Price return = (ending price − starting price) ÷ starting price × 100
For an illustrative one-year holding, suppose you buy one share for $100 and its price ends the year at $105. The price gain is $5. Divide $5 by the $100 starting price: the price return is 5%. This describes the share price over that year, before fees and taxes. The starting price must be greater than zero. Compare prices on the same split-adjusted basis so a stock split does not appear as an investment loss.
For a single holding period, with dividends kept as cash and no other money added or withdrawn:
Total return = (ending price − starting price + cash dividends) ÷ starting price × 100
Keep the same $100 starting price and $105 ending price. Now assume the share also pays $3 per share in cash dividends during that same year. The holder finishes with a share worth $105 and $3 in cash, or $108 in total. The $8 gain on the original $100 is an 8% total return, before fees and taxes.
The price return is still 5%. The dividend adds another $3 of income in this example; it does not change which price observations the price-return formula uses. If the share instead ended at $95, the $3 cash dividend would reduce the total loss to $2, a −2% total return. Income does not necessarily prevent a loss.
A published total-return series often assumes dividends buy additional shares when they are paid. Those extra shares then participate in later price changes and may earn further dividends. That result depends on payment dates and reinvestment prices, not just the final price and a sum of dividends.
The simple formula above assumes dividends remain as cash without earning a further return. It is not a shortcut for a reinvested-dividend history. See how dividend reinvestment works for an illustration of how reinvestment can change an outcome. Check the assumptions of the particular chart or provider before comparing it with another return series.
The Featured stock comparisons label their performance lines as share-price changes excluding dividends. For example, the Magnificent 7 price-performance charts compare price paths; they do not show what a dividend-reinvesting portfolio would have earned.
A company’s market-cap growth is another measure. It can change when the number of shares changes, so it is not the same as either a share-price return or a portfolio return. The ranking methodology explains the figures and their history limits.
Compare the same dates, currency, and dividend assumptions. Check whether fees and taxes have been subtracted. Do not add dividends to a series that already includes them.
Money you add to an account is not investment profit. If you make deposits or withdrawals, see dated cash flows and XIRR. To describe the yearly pace of a single starting investment, see annualized growth and CAGR. To ask what the result can buy after prices rise, see nominal and inflation-adjusted returns.
For general education only. Nothing here is investment advice.
References explain the concepts; MarketCapLens supplies the examples and calculator assumptions. See who checks the numbers.