Many StocksGuide users have requested the "Total Return" metric to better compare stock performance. This article covers everything you need to know about Total Return, its importance for investors, and how it is represented in StocksGuide.
Table of Contents
- Definition: What is Total Return?
- Importance & Calculation of Total Return with a German Stock Example
- Total Return in stocks.guide Charts
- Conclusion on the Total Return Strategy
Definition: What is Total Return?
Total Return measures the entire return of an investment over a specific period, accounting for both dividends received and price gains or losses, providing a more comprehensive view of a stock's actual performance.
Example: ST&T stock has declined by 14.45 % over the past 6 years. Including dividends, the performance is 26.49%, showing a significant difference of 41 percentage points.
Importance & Calculation of Total Return
Total Return gives a realistic overview of investment returns, considering both price changes and payouts. For stocks, it is calculated assuming all dividends are reinvested without changing the portfolio structure.
Example: AT&T's over the last six years is actually negative, although its pure total return looks much better.
Total Return in StocksGuide Charts
The Total Return metric is available in the StocksGuide charts tool, allowing comparisons of different stocks and indices for a direct performance overview. For instance, comparing Coca Cola and Pepsi over the past 6 years is insightful. It is recommended to use the normalized (percentage) view for a better relative performance overview.
Conclusion on the Total Return Strategy
Total Return is crucial for investors seeking a complete picture of their investments' performance. The integration of Total Return in stocks.guide charts enables informed decisions based on total returns.
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