Total stock returns are an essential metric for assessing the performance of an investment in the stock market. It becomes a very important metric when tracking returns over several years or longer as many companies pay out dividends and the reinvestment of these dividends is an important component of your returns.
Use this calculator to determine what your total returns would be and see what component of return is from price and what comes from dividend reinvestment.
Please note that this tool is for educational and informational purposes only. If you notice any errors or unexpected results, please do send us an email or leave a note in the comments below.
Usage Guide
This calculator helps you calculate the total returns of a stock or the dividend reinvestment return (DRIP returns). While the inputs should be largely self-explanatory, here are a few important clarifications.
- Ticker: Please use the Yahoo Finance format along with the country suffix. Here are a few examples:
- US: Use “.US” – For Apple, use AAPL.US
- UK: Use “.L” – For Unilever Plc, you would use ULVR.L
- Canada: “.TO” – For Royal Bank of Canada, you would use RY.TO
- India: “.NS” – For Reliance Industries, you would use RELIANCE.NS
- Australia: “.ASX”
- Ticker 2 and Ticker 3: These are optional and can be used to generate comparisons. The results are shown in the second chart. If you have chosen a long modeling period, the plots might take a few additional seconds to show up.
- Starting Portfolio Value: This is an optional field. If you would like to see how much a certain amount of money invested in a stock would be worth now, then enter the figure. The default is 1,000.
- Fractional Shares: This is an important one to note. Default is Yes. If you want to model the theoretical total return for your Starting Portfolio Value, then set this to Yes. Some brokers also allow fractional share purchases so this would be useful for those cases. If you only want to model purchases of whole shares, then disable this. The calculator tracks unused cash and includes this in the return calculation.
- Dividend Tax Rate: As the name sounds. please use the dividend tax rate appropriate for your case.
Rate Limit: Please note that as there is a limit on the number of calculations you can perform with this tool. If you run in to a rate limit, please come back after a couple of minutes. There is a hard limit of 50 calculations per day, so if you do hit that, please try again the next day.
Why Total Return Matters
In the financial world, the concept of total returns is not just an arcane metric; it’s a comprehensive lens through which the true performance of stock investments should be evaluated. If you’re not looking at total returns of a stock or an index, you’re missing an important piece of the puzzle.
To understand just how much income a specific stock or fund generates, please see our dividend income calculator.
Here’s a more detailed exploration of why understanding and calculating total returns is essential:
Holistic View of Investment Performance: Total returns go beyond mere stock price appreciation. They include dividends, interest, and capital gains distributions. This approach provides a fuller picture of an investment’s performance, reflecting both the growth in stock value and the income generated.
For example, a stock may not have a significant price increase but could be providing substantial returns through regular dividends.
Note that stock splits do not increase your returns as it simply increases the number of shares you own and proportionately decreases the share price. Whether you cut a 12″ pizza in to 6 slices or 12 slices, it’s still the same pie!
Our calculator does factor in splits correctly.
Reinvestment Insight: For those employing strategies like dividend reinvestment, understanding total returns is pivotal. It shows how reinvesting earnings back into the stock can impact the overall growth of the investment. This is particularly relevant for long-term investors who capitalize on the power of compounding over time.
Tax Impact: Dividends are generally taxable in most countries, unless you hold your investments in a tax-exempt account. To see what impact taxes can have on your portfolio, try using the relevant tax rates in the calculator above.
As you may expect, stocks that have a higher dividend will face a greater hit to their total return when held in a taxable account. And of course this effect compounds over a longer period of time.
Comparative Analysis: When comparing stocks or other investments, simply looking at stock price changes can be misleading. Total returns level the playing field, allowing for a more accurate comparison. This is crucial for portfolio diversification, where different asset classes and securities are evaluated on their overall contribution to portfolio growth.
Risk Assessment: Total returns also play a vital role in assessing the risk-reward profile of investments. By understanding the total returns, investors can better gauge whether the potential returns of a stock are worth the risks involved. This is particularly important in volatile markets, where stock prices can fluctuate significantly.
Long-Term Strategy Development: For retirement planning and long-term investment strategies, focusing on total returns helps in selecting investments that promise steady growth and income over time, aligning with long-term financial goals.
Retirees often tend to prioritize dividend paying index funds and stocks at the expense of price appreciation. This can often be a dangerous strategy if this means that you’re stuck in more utility-like companies (the ones that tend to pay higher dividends) while not getting any exposure to growth-oriented companies (often lower dividend, but higher total return).
We’ve talked about this at length in our other articles and will continue to stress this point – For your risk profile, it’s better to optimize for total returns than for dividend income. You can generate your own income by selling down some shares. Often capital gains will also be taxed at a lower rate than dividends, so there’s a double benefit!
Before You Go…
Hopefully you found this information useful. Please do let me know in the comments if you have any feedback, comments, or questions!
Our whole blog is dedicated to help you get on the path of financial freedom. Feel free to browse around and read through the articles. We’ve got loads of calculators for your needs. Try our stock beta calculator, for example.
If you have any questions, comments, or feedback, please let us know in the comments below or send us an email.
by Andrew Garcia
Andrew, an alumnus of South Florida State College, loves finance, fintech, and coding. When he’s not crunching numbers at the bank, he’s passionately writing about personal finance and building calculators for PFF. See more.
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