Total return

The complete return from holding an asset over a period: the change in price plus every distribution received, expressed against the amount invested.

Example

A share bought at 50, sold at 90, having paid 13.18 of dividends, returned (90 + 13.18) / 50 - 1 = 106.36%, against a price return of 80%.

Important

A price chart is not a return. For an asset paying meaningful income the two figures diverge substantially, and the gap grows with the holding period.

Related terms

• Dividend — A distribution of cash (occasionally shares) from a company to its shareholders, declared at the discretion of the board out of the company's available profits.
• Annualised return — A return restated as the equivalent constant rate per year: total proceeds over total cost, raised to the power of one over the number of years, minus one.
• Return on investment (ROI) — Total proceeds less total cost, divided by total cost - the simplest measure of what an investment produced.
• Reinvestment — Using an investment's income or gains to buy more of the same investment, rather than taking them as cash.

Lessons that explain it

• The only class here that charges you for holding it — There is no income at all - no coupon, no dividend, no rent. The return is the price change minus the cost of carry, which means a flat price is a loss, and the loss compounds. (10 min)
• No coupon, no rent, no earnings: the next buyer is the return — There is no income here by default and no cash flow to discount. Where a protocol does pay a yield, the useful question is not how much - it is where the money comes from, and sometimes the honest answer is other holders. (11 min)
• The fund manufactures nothing: pass-through, minus costs — A fund's return is the weighted return of its holdings less what it charges. Knowing that changes what you are actually forecasting when you forecast a fund. (11 min)
• Where an equity return comes from: cash paid out, and cash kept in — Two sources, one pool. A company either hands you cash or reinvests it on your behalf - and a company that reinvests is not withholding your return. (11 min)
• Gross yield is not a yield — Rent divided by price is the number every listing quotes and no owner receives. Take the five deductions out and Property P's 8.00% becomes 4.264% - and the two halves of the return turn out to be far less connected than they sound. (12 min)

All 578 terms in the Investing glossary