Understanding Total Return
Formula
Total Return = (Sell Price - Buy Price + Dividends) / Buy Price x 100
Concrete Example
Bought at 50 EUR, sold at 65 EUR, dividends received: 3 EUR.
- Price return only: (65 - 50) / 50 = 30%
- Total return: (65 - 50 + 3) / 50 = 36%
Dividends add 6 percentage points of return. Ignoring dividends underestimates the true performance of your investment.
Total return is the most comprehensive measure of investment performance because it includes both capital appreciation and income distributions.