what is total return 
total return when measuring performance is the actual rate of return of an investment or a pool of investments over a given evaluation period total return includes interest capital gains dividends and distributions realized over a period total return accounts for two categories of return income including interest paid by fixed income investments distributions or dividends and capital appreciation representing the change in the market price of an asset understanding total returntotal return is the amount of value an investor earns from a security over a specific period typically one year when all distributions are reinvested the total return is expressed as a percentage of the amount invested for example a total return of 20 means the security increased by 20 of its original value due to a price increase distribution of dividends if a stock coupons if a bond or capital gains if a fund it is a strong measure of an investment s overall performance some of the best dividend stocks have low growth potential and produce small capital gains basing an investment s return on capital gains alone does not take into consideration price increases or other methods of growing the stock s value for example an investor buys shares of company b and the share price increases 24 5 in one year the investor gains 24 5 from the price change alone since company b also paid a dividend during the year adding in the stock s yield of 4 1 to the price change the combined return is 28 6 the investor may wish to calculate dividend adjusted return this figure considers both the stock price appreciation and its dividends the dividend adjusted return provides a more accurate valuation of a stock s return total return determines an investment s true growth over time it is important to evaluate the big picture and not just one return metric when determining an increase in value total return is used when analyzing a company s historical performance calculating expected future returns puts reasonable expectations on an investor s investments and helps plan for retirement or other needs 