Total return

Total return is the full return from holding an investment — the change in price plus any dividends, distributions, and interest received over the period. It is the only return number that accurately reflects what happened to your money.

Formula

total_return = (ending_price - starting_price + distributions) / starting_price

A stock that started the year at $100, ended at $108, and paid $3 in dividends had an 11% total return — not 8%.

Price return vs total return

• Price return is the change in price alone. The number you see when you check the ticker.
• Total return includes price change plus all cash distributions. Always equal to or greater than price return for normal investments.

For a non-dividend-paying growth stock the two are identical. For an S&P 500 index fund or a high-dividend stock, the gap is meaningful — historically about 1.5 – 2 percentage points per year for the S&P 500.

Why dividends compound

Reinvested dividends are the engine behind most long-run equity return. Over decades, the difference between price return and total return is enormous because reinvested dividends buy more shares, which produce more dividends, which buy more shares.

The S&P 500's price return over the 50 years ending in 2024 was roughly 7% annualized. Its total return was roughly 10%. Compounded over 50 years, that 3-point-per-year gap means the total-return investor ended with several times more money.

What total return doesn't include

• Taxes. Pre-tax total return is what fund factsheets show. After-tax return depends on your account type and tax bracket.
• Inflation. Total return is nominal. Real (inflation-adjusted) return is what your purchasing power actually changed by.
• Fees. Net return after the expense ratio is what you actually keep. Most published total returns are net of fund-level fees but not advisor or account fees.