How to Calculate Total Return to Shareholders

Investors want a high return on their shares.

Total return to a shareholder shows is a term used by investors to help compare how much they make on a stock investment. When an investor owns shares of a company, they become a shareholder. Shareholders have two possible cash flows from their investment, the return on their stock and any dividends. The return on their stock is any changes in the fair market value of their stock. Dividends are amounts a company pays from its earnings during the year.

Instructions

1. Subtract the beginning price of the stock from the ending price of the stock for the period. The period is any time you want to examine. It can range from a week to a year or more, depending on how long you want to examine. For example, on January 1, you own stock worth $30. On December 31, the stock is worth $40. Then, $40 minus $30 equals $10.

2. Add any dividends paid during the year. A dividend is a distribution made by the company to its stock owners. Dividends come from a company's earnings. In the example, if you receive $40 in dividends for the year, then $40 plus $10 equals $50.

3. Divide the total return by the stocks beginning price. In the example, $50 divided by $30 equals 167 percent. This shows that over the year, you had a return of 167 percent from what you started with at the beginning of the period.

Tips & Warnings

• If you have not kept track of stock prices for your stock on a given date, then you can use a stock market quote site, such as Forbes, Google or Yahoo Finance, to find the stock's historic price.

References

• Value Based Management: Total Shareholder Return Explained