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What you will learn
- Calculate a simple return with both a value change and cash dividends.
- Distinguish a dividend amount from a price change and a deposit.
- Avoid double counting when the dividend is already in account value.
Add the value change and cash received
Our simplified formula is: return in percent = (ending share value − starting value + cash dividends received) ÷ starting value × 100. In this particular formula, ending value refers to the shares, not an account that already includes the dividend cash.
The example covers a holding without purchases, sales, deposits or reinvestment during the period. That makes the two parts easy to see. FINRA explains that total return includes both value changes and investment income, while costs also affect the result.
A rising share price and a cash dividend
Twenty fictional shares cost SEK 50 each at the start, making the holding worth SEK 1,000. At the end, the price is SEK 53 and the shares are worth SEK 1,060. During the period you also received SEK 2 per share, or SEK 40 in total, as a dividend.
The price gain is SEK 60, or 6 percent. Including the SEK 40 gives a result of SEK 100, or 10 percent of starting value. The dividend remains in cash and has not been used to buy more shares in this exercise.
If the table does not fit, scroll it sideways.
| Part | Calculation | Result |
|---|---|---|
| Starting value | 20 × SEK 50 | SEK 1,000 |
| Ending share value | 20 × SEK 53 | SEK 1,060 |
| Dividend received | 20 × SEK 2 | SEK 40 |
| Combined result | 1,060 − 1,000 + 40 | SEK 100 / 10 % |
A dividend does not make every period positive
Change the ending share price to SEK 46, keeping the same dividend. The share holding is now worth SEK 920. Its price loss is SEK 80. The SEK 40 dividend reduces the combined loss to SEK 40, giving −4 percent before costs.
A dividend therefore guarantees no positive return. In an exercise, follow both cash and share value. The amount paid out is not a new deposit from you, and it should not be described as if the price loss had never occurred.
Count every amount once
If your final account value is already SEK 1,100, it consists of shares worth SEK 1,060 and dividend cash of SEK 40. Use 1,100 − 1,000 = SEK 100. Adding the same SEK 40 again would incorrectly give SEK 140 and 14 percent.
Record what cash the ending value includes. Taxes, trading fees, reinvestment and different payment dates make real calculations more complex than our model. This lesson does not describe a particular tax rule or dividend feature in Investiq. Use the example to examine what a stated return includes.
Try it yourself
Ten shares are bought for SEK 80 each. At the end they are worth SEK 76 each and you have received SEK 3 per share in cash dividends. Calculate return before costs, without reinvestment.
Show the solution and explanation
−1.25 percent.
Starting value is SEK 800, ending share value is SEK 760 and dividends total SEK 30. Result: 760 − 800 + 30 = −10. −10 ÷ 800 × 100 = −1.25 percent.
Check your understanding
Can a price chart alone show return including dividends?
Not if it only shows share prices. Check whether the chart or measure includes dividends and how it handles them.
Can you add dividends when they are already in the final account's cash?
No. That would count the same money twice. First state whether ending value covers only shares or the whole account.
Practise with virtual money
Try what you just learned in a practice portfolio with virtual money. You don't deposit any real money.
How the practice portfolio worksKeep learning and practising
More lessons on this topic
Prices, company events and currency
Sources and examples
The sources support the factual explanations. Calculations and exercises were created for this lesson. Amounts and price changes are invented unless stated otherwise.
This material is educational and does not recommend securities to buy. A simulated result does not guarantee a future result.
