Stock Return Calculator

Total return on a stock investment is the change in value plus dividends received, expressed as a percentage of cost basis. Annualized return converts a holding-period return into an equivalent annual rate using the compounding formula: (1 + total_return)^(1/years) - 1.

Enter buy price, sell price, share count, dividends received, and holding period to compute total return, annualized return, and dollar profit. The tool assumes no reinvestment of dividends; for that scenario, treat each dividend as a fresh purchase and chain the math.

The formulas are direct. Cost basis = buy_price × shares + buy_commission. Proceeds = sell_price × shares + dividends_received - sell_commission. Total return percentage = (proceeds - cost_basis) / cost_basis × 100. Annualized return = (proceeds / cost_basis)^(1/years) - 1. The annualization assumes returns compound geometrically — a 50 percent total return over 2 years annualizes to about 22.47 percent per year, not 25, because (1.2247)² = 1.5. The arithmetic of compounded returns penalizes drawdowns: a stock that drops 50 percent then rises 50 percent is back to 75 percent of its starting value, not even.

A worked example. Bought 100 shares of XYZ at $42 with a $5 commission, sold 3 years later at $58 with another $5 commission. Received $1.20 per share per year in dividends, total $360 over 3 years. Cost basis: 100 × 42 + 5 = $4,205. Proceeds: 100 × 58 + 360 - 5 = $6,155. Profit: $1,950. Total return: 1,950 / 4,205 = 46.4 percent. Annualized: (6,155 / 4,205)^(1/3) - 1 = (1.464)^0.333 - 1 = 1.135 - 1 = 13.5 percent per year. Compare against the S&P 500's 10 percent average — outperformed by about 3.5 percentage points before tax and risk adjustment.

Limitations and the things that move the answer. Pre-tax versus after-tax returns can differ substantially: long-term capital gains (held over a year) face lower rates than short-term (ordinary income), and qualified dividends get the lower rate while ordinary dividends don't. Two investments with identical pre-tax returns can yield wildly different after-tax outcomes. Reinvested dividends (DRIP) compound and produce higher ending value than the calculator's simple cash-dividend model. Inflation matters for long horizons: a 10 percent nominal return over 20 years with 3 percent inflation is closer to 7 percent real. Risk-adjusted return (Sharpe ratio, Sortino) gives a fairer comparison than raw return when volatility differs. The calculator gives nominal pre-tax return on a single round-trip — useful as a baseline, not a portfolio analysis tool.