Stock Return Calculator
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Price Return (excl. dividends)
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Total Return (incl. dividends)
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Understanding Stock Returns
Stock returns measure the profit or loss from a stock investment over a given period. The simplest metric is price return, which compares the buy and sell prices. However, total return provides a more complete picture by also including dividends, which are cash payments companies distribute to shareholders from their profits. Historically, dividends have contributed a substantial portion of the total return from stock market investments.
This calculator computes both price return (capital gains only) and total return (including dividends). When you provide buy and sell dates, it also calculates the annualized return using the compound annual growth rate (CAGR) formula. Annualized returns allow you to compare investments of different durations on equal footing. For example, a 100% return over 10 years is equivalent to roughly 7.2% annualized, while a 20% return over 1 year is a 20% annualized return.
When evaluating stock performance, consider that past returns do not guarantee future results. Transaction costs, taxes on capital gains and dividends, and inflation all reduce real returns. It is also important to compare returns against a benchmark index to determine whether a stock outperformed or underperformed the broader market during the same period.
Frequently Asked Questions
How do you calculate stock returns?
Stock return is calculated as (Sell Price - Buy Price) x Number of Shares. The percentage return is ((Sell Price - Buy Price) / Buy Price) x 100. For total return including dividends, add the total dividends received to the capital gain.
What is the difference between total return and price return?
Price return only considers the change in stock price. Total return includes both price change and dividends received. Total return is the more comprehensive measure as dividends historically account for a significant portion of stock market returns.
What are annualized returns and why do they matter?
Annualized return converts a total return over any time period into an equivalent yearly rate, making it possible to fairly compare investments held for different lengths of time. The formula uses the CAGR method: ((1 + total return) ^ (1 / years)) - 1.
How do dividends impact stock returns?
Dividends have historically contributed 30-40% of the S&P 500's total return, according to Hartford Funds research. A $10,000 investment in the S&P 500 in 1960 would have grown to approximately $795,000 by 2023 with dividends reinvested, versus only $350,000 with price appreciation alone. Dividends provide a cushion during market downturns because they continue paying regardless of price movement, and reinvesting dividends during downturns purchases more shares at lower prices. Use our compound interest calculator to model the impact of dividend reinvestment over different time periods.
What is a good annual stock return?
The S&P 500 has returned an average of approximately 10.5% per year (nominal) or 7.2% after inflation since 1928, according to NYU Stern School of Business data. Returns above 10% annualized over a holding period of 5+ years are considered strong. However, individual stock returns vary enormously -- the top 10% of S&P 500 stocks in any given year typically return 40%+ while the bottom 10% may lose 30%+. When evaluating your stock returns, compare against a relevant benchmark index over the same period. Consistently beating the index suggests skill or favorable stock selection.
How are stock capital gains taxed?
In the US, stock capital gains are taxed based on holding period. Short-term gains (held less than 1 year) are taxed as ordinary income at your marginal rate (10-37% for 2024). Long-term gains (held more than 1 year) benefit from preferential rates of 0%, 15%, or 20% depending on taxable income. Qualified dividends receive the same favorable long-term capital gains rates. Capital losses can offset gains, and up to $3,000 of excess losses can be deducted against ordinary income annually. Tax-loss harvesting -- strategically selling losing positions to offset gains -- is a common strategy for reducing tax liability on profitable stock investments.