Glossary · Stocks and markets
Total return
Total return is everything an investment earned over a period: the change in its price plus the dividends or interest it paid, as a percent.
Also called: total shareholder return, TSR, return with dividends, total return index
With dividends reinvested, since Oct 2016. Price alone: $36,037.
Dividends reinvested, before inflation. Price alone: 4.9% a year.
In plain words
You buy a share for $100. A year later it is worth $106, and along the way it paid you $3 in dividends. The price rose 6%, but you earned $9: a total return of 9%.
Total return counts everything: the price change plus the dividends (for stocks) or the interest (for bonds). Over several years it assumes the payouts are reinvested, so later dividends are earned on a bigger pile.
Most indexes you see quoted, including the S&P 500, count price only. Over one year the gap is small; over decades it is huge. $10,000 put into the S&P 500 in Oct 2016 grew to about $42,295 with dividends reinvested, against $36,037 from the price alone.
Example
Two years with dividends reinvested
- Year 1: you buy 100 shares at $50 ($5,000). They pay $2 a share during the year ($200), reinvested at $50: 4 more shares.
- The price ends the year at $53: 104 shares × $53 = $5,512. Total return: 10.2%; price return: 6%.
- Year 2: the price slips to $51 and the dividend is again $2: 104 × $2 = $208, which buys 4.08 more shares at $51.
- You end with 108.08 shares × $51 = $5,512. Over two years the total return is 10.2%, while the price rose only 2%.
The price went from $50 to $51; your money went from $5,000 to $5,512. The difference is the dividends.
One level deeper
A total return index adds each dividend back on the day it is paid, as if it bought more of the index. Fund returns are usually reported this way, after fees. Companies call their own version total shareholder return (TSR), and US companies must show it in their annual report as the value of $100 invested five years earlier, next to an index.
Since 1871, the S&P 500 and its predecessors returned 9.4% a year in total, of which prices alone gave 4.9%. Compounded over a century and a half, that gap grew into a factor of 685 times.
Total return is still before inflation, taxes and fees. Subtract inflation and you get the real return: 7.1% a year for US stocks since 1871.
$1 in US stocks since 1871: price only and total return
The same stocks, counted two ways. Both lines start at $1 in 1871. The gap between them is reinvested dividends: $1 became about $1,739 from prices alone and about $1.19M in total.
The numbers behind the chart
| Date | With dividends reinvested | Price only |
|---|---|---|
| Jan 1871 | $1 | $1 |
| Dec 1880 | $2.42 | $1.31 |
| Dec 1890 | $3.15 | $1.04 |
| Dec 1900 | $7.24 | $1.55 |
| Dec 1910 | $14.92 | $2.04 |
| Dec 1920 | $20.52 | $1.53 |
| Dec 1930 | $78.94 | $3.49 |
| Dec 1940 | $94.1 | $2.37 |
| Dec 1950 | $313 | $4.45 |
| Dec 1960 | $1,418 | $12.79 |
| Dec 1970 | $3,094 | $20.28 |
| Dec 1980 | $6,923 | $30.07 |
| Dec 1990 | $25.5K | $74.04 |
| Dec 2000 | $129K | $300 |
| Dec 2010 | $145K | $280 |
| Dec 2020 | $526K | $832 |
| Dec 2022 | $573K | $881 |
| Dec 2023 | $697K | $1,055 |
| Dec 2024 | $907K | $1,354 |
| Dec 2025 | $1.05M | $1,543 |
| Oct 2026 | $1.19M | $1,739 |
Why it matters
It is the only fair way to compare investments that pay out differently: a stock with a high dividend and slow price growth against one with no dividend and fast growth.
Leaving out dividends makes stocks look much worse over long periods than they really were.
When a fund or a company boasts about its performance, ask whether it is total return, and whether it is after fees.
A common mistake
Myth: If a stock’s price is where it was ten years ago, its owners earned nothing.
In fact: They may have earned the dividends. A share that stayed at $50 for ten years while paying $2 a year, reinvested, returned about 48% in total.
Questions people ask
What is the difference between total return and price return?
Price return counts only the change in price; total return adds the dividends or interest, reinvested. For the S&P 500 since 1871: 4.9% a year from price alone, 9.4% a year in total.
How do you calculate total return?
(End value − start value + payouts received) ÷ start value. Over several years, link the yearly returns: multiply (1 + each year’s return) together and subtract 1.
Does total return include inflation?
No, it is before inflation. Take inflation out and you get the real return, which is what your money can actually buy.
Read more on BigCapital
About the numbers
- The numbers on this page are recalculated from the data every night; the sources are listed at the end of the page.
- S&P Composite price and total return since 1871, and US consumer prices: Robert J. Shiller, Online Data (shillerdata.com); total return with dividends reinvested monthly, calculated by BigCapital.
- This page explains a term. It is not investment advice.