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Rate of Return Calculator

Calculate total and annualized rate of return on investments including dividends.

What this tool does

Calculate total and annualized rate of return on investments including dividends. You fill in these fields: Amount invested, Value at the end, Dividends received, and Years held. It shows annualized return, total return, simple return, capital gains, and dividend yield.

Inputs

  • Amount invested (USD): A number. Must be greater than 0. What you paid for the investment at the start.
  • Value at the end (USD): A number. Must be at least 0. What the investment is worth at the end, not counting dividends.
  • Dividends received (USD): A number. Must be at least 0. Total dividends over the whole holding period. Enter 0 if you received none.
  • Years held (years): A number. Must be greater than 0. How long you held the investment. Partial years such as 2.5 are fine.

How to use

  1. Enter the amount invested in USD.
  2. Enter the value at the end in USD.
  3. Enter the dividends received in USD.
  4. Enter the years held in years.
  5. Read the result: annualized return, total return, simple return, capital gains, and dividend yield. It appears once every required field has a valid value.

Worked examples

Example 1. Inputs:

  • Amount invested: 1,000 USD
  • Value at the end: 2,000 USD
  • Dividends received: 0 USD
  • Years held: 10 years

Results:

  • Annualized return: 7.18% (a year, including dividends)
  • Total return: $1,000.00 (final value plus dividends, minus the amount invested)
  • Simple return: 100.00% (over the whole holding period)
  • Capital gains: $1,000.00 (price change only, without dividends)
  • Dividend yield: 0.00% (dividends as a share of the amount invested)

How this is worked out: Gain = 2000 - 1000 = 1000. Simple return = 1000 / 1000 x 100 = 100%. Annualized = (2000 / 1000)^(1/10) - 1 = 2^(0.1) - 1 = 0.0717734625, so 7.177346% a year (one doubling in ten years).

Example 2. Inputs:

  • Amount invested: 1,000 USD
  • Value at the end: 1,200 USD
  • Dividends received: 300 USD
  • Years held: 2 years

Results:

  • Annualized return: 22.47% (a year, including dividends)
  • Total return: $500.00 (final value plus dividends, minus the amount invested)
  • Simple return: 50.00% (over the whole holding period)
  • Capital gains: $200.00 (price change only, without dividends)
  • Dividend yield: 30.00% (dividends as a share of the amount invested)

How this is worked out: Total value = 1200 + 300 = 1500. Total return = 1500 - 1000 = 500. Simple return = 500 / 1000 x 100 = 50%. Annualized = (1500 / 1000)^(1/2) - 1 = sqrt(1.5) - 1 = 0.2247448714, so 22.474487% a year.

Example 3. Inputs:

  • Amount invested: 1,000 USD
  • Value at the end: 800 USD
  • Dividends received: 0 USD
  • Years held: 4 years

Results:

  • Annualized return: -5.43% (a year, including dividends)
  • Total return: -$200.00 (final value plus dividends, minus the amount invested)
  • Simple return: -20.00% (over the whole holding period)
  • Capital gains: -$200.00 (price change only, without dividends)
  • Dividend yield: 0.00% (dividends as a share of the amount invested)

How this is worked out: Gain = 800 - 1000 = -200. Simple return = -200 / 1000 x 100 = -20%. Annualized = 0.8^(1/4) - 1. sqrt(0.8) = 0.894427191, sqrt(0.894427191) = 0.945741609, so the annual rate is -0.054258391 = -5.425839% a year.

Example 4. Inputs:

  • Amount invested: 1,000 USD
  • Value at the end: 0 USD
  • Dividends received: 0 USD
  • Years held: 3 years

Results:

  • Annualized return: -100.00% (a year, including dividends)
  • Total return: -$1,000.00 (final value plus dividends, minus the amount invested)
  • Simple return: -100.00% (over the whole holding period)
  • Capital gains: -$1,000.00 (price change only, without dividends)
  • Dividend yield: 0.00% (dividends as a share of the amount invested)

How this is worked out: Nothing is left at the end. Gain = 0 - 1000 = -1000. Simple return = -1000 / 1000 x 100 = -100%. Annualized = 0^(1/3) - 1 = 0 - 1 = -1, so -100%.

Limitations

  • Assumes one amount invested at the start and one value at the end. Money added or taken out during the period is not included.
  • Dividends are treated as received at the end of the holding period, not reinvested along the way.
  • Does not account for taxes, trading fees or inflation.

FAQs

Q: Does the annualized return include dividends?
A: Yes. Dividends are added to the value at the end, and the annual rate is worked out from that total as if all of it were received at the end of the holding period. Dividends are not reinvested along the way in this calculation.
Q: Why is the annualized return different from the total return?
A: The total return is the whole gain as a percent of the amount invested. The annualized return spreads that growth across the years held as one steady yearly rate that compounds to the same result.
Q: What should I enter if I received no dividends?
A: Enter 0 in the Dividends received field. The field needs a number before the result is shown.
Q: What does a negative result mean?
A: The investment is worth less than the amount invested, so the return is shown with a minus sign. If the value at the end is 0, the return is -100%.

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