Portfolio Total Return
Total Return is the complete measure of your portfolio's performance, combining all sources of return.
The Formula
Total Return = Unrealized Gains + Realized Gains + Dividends Received
The Three Components
1. Unrealized Gains
Paper profits (or losses) on positions you still hold. If you bought at $100 and it's now $120, you have $20 of unrealized gains per share.
2. Realized Gains
Profits (or losses) from positions you've sold. These are "locked in"—the stock price can't change your return anymore.
3. Dividends Received
All dividend payments credited to your portfolio. This is real cash income, regardless of what happens to stock prices.
Why Total Return Matters
Dividend investors often see modest price appreciation but substantial dividend income. Looking only at price changes would dramatically understate actual returns.
Example
| Component | Amount |
|---|---|
| Unrealized Gains | +$500 |
| Realized Gains | +$200 |
| Dividends | +$800 |
| Total Return | +$1,500 |
On a $10,000 portfolio, that's a 15% total return—even if some holdings are down!