Portfolio
Total Return
Focusing only on price change can understate how much an investment truly earns. Total return adds in dividends, interest, and other distributions, giving a complete picture of performance.
For income-producing assets like dividend stocks and bonds, reinvested payments can make up a large share of long-term returns. Comparing investments on a total-return basis avoids being misled by price alone.
Because reinvested income compounds over time, total return is the fairest way to judge how well an investment has actually rewarded its holder.
Example
A stock that rises 5% and pays a 3% dividend delivers roughly an 8% total return for the year.
Total Return — FAQ
What is Total Return?
Total return is the full gain or loss on an investment over a period, combining price change with income such as dividends or interest.
Can you give an example of Total Return?
A stock that rises 5% and pays a 3% dividend delivers roughly an 8% total return for the year.
Understanding creates conviction.
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