Glossary
Total return
An investment’s full gain or loss over a period, counting price change plus dividends or interest received, usually assuming they are reinvested.
On this page
Total return is the complete result of holding an investment over a period: the change in its price plus all the income it paid, such as dividends or bond interest. It is the honest way to compare investments, because price alone understates what income-paying assets delivered. A utility stock that rose 2% while yielding 4% did better than a non-paying stock that rose 5%.
How it works
Over several years, total return is usually measured with income reinvested, so that dividends buy more shares that earn their own dividends. Index providers publish both versions: a price index and a total-return index of the same stocks.
Why the difference adds up
Over long periods, reinvested dividends account for a large share of what broad stock markets have returned. The gap between the S&P 500's price index and its total-return index widens every year the index pays dividends, which is why long-run charts of price alone undersell stocks.
When comparing funds or reading performance claims, check three things: whether the figure is price or total return, whether it is annualized, and whether it is before or after fees and taxes. Fund fact sheets report total return net of the expense ratio, but not of the taxes you owe on distributions in a taxable account. A total return also says nothing about the path: two investments can end with the same figure after very different drawdowns.