How to Calculate the Performance of a Stock That Has Dividends
Original post by Mark Kennan of Demand Media
If your stock's price per share does not increase, or even decreases, you may still make a profit if the stock pays dividends. When measuring the performance of a stock that pays dividends, if you do not account for the dividends, you do not get a true picture of the return. When measuring the return of a stock that pays dividends, you can measure return as a dollar figure or a percentage of the purchase price.
Subtract the initial price of the stock from the ending price. If your answer is negative, your stock decreased in value. For example, if you bought a stock for $35 and sold it for $32, you lost $3.
Add any dividends paid by the stock while you owned it. In this example, if the stock paid $1.20 in dividends, add $1.20 to $-3 to get $-1.80.
Divide the gain or loss after accounting for dividends by the purchase price to find the rate of return. In this example, divide $-1.80 by $35 to get -0.0514, or a loss of 5.14 percent.
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About the Author
Mark Kennan is a freelance writer specializing in finance-related articles. He has worked as a sports editor for "Ring-Tum Phi" and published articles on a number of online outlets. Kennan holds a Bachelor of Arts in history and politics from Washington and Lee University.
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