Annualized Stock Return (CAGR) Calculator

Frequently Asked Questions

What is total return versus price return?

Price return only counts capital appreciation (sale price minus purchase price). Total return adds dividends and assumes they are reinvested. Over the long run, dividends have contributed roughly 30-40% of the S&P 500's total return, so ignoring them dramatically understates performance.

What is a realistic long-term stock return?

The S&P 500 has averaged about 10% nominal (roughly 6.5-7% after inflation) annualized since 1926. Individual stocks vary wildly. Anyone projecting more than 10-12% long-term should be treated with skepticism.

How do I annualize a multi-year return?

Use CAGR: (Ending / Beginning)^(1/years) - 1. For example, doubling your money in 7 years is roughly 10.4% annualized, not 100% / 7 = 14.3%. Simple averages overstate compound performance.

Should I include taxes and fees?

For an honest comparison, yes. Long-term capital gains are taxed at 0%, 15%, or 20% federally in 2025 depending on income, plus 3.8% NIIT for high earners. Expense ratios above 0.20% and active trading fees can erode multi-decade returns by 20%+.

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Estimates only. Not investment advice.

Investment Disclaimer: Estimates only. Not investment advice.

This calculator provides estimates for educational purposes only and is not investment advice. Past performance does not guarantee future results. Consult with a qualified financial advisor before making investment decisions. All investments carry risk, including potential loss of principal.

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How This Calculator Works

You enter shares owned, buy price, sell price, total dividends received per share, and years held. The tool computes your cost basis and sale proceeds, the capital gain, and the dividend income, then combines them into total profit and a total return percentage on cost. Crucially it also computes the annualized return (CAGR), which compounds the result correctly across the holding period rather than naively dividing by years, plus the share of return attributable to dividends. It then benchmarks your annualized figure against the S&P 500's long-run 10.2% average and labels whether you beat, matched, or trailed the market.

The Formula

Cost = shares × buy price; proceeds = shares × sell price; dividends = shares × dividend per share. Total profit = (proceeds − cost) + dividends, and total return% = total profit ÷ cost × 100. Annualized return = (1 + total profit ÷ cost)^1/years − 1, expressed as a percent - this is the constant yearly rate that compounds to your actual result. Dividend contribution = dividends ÷ cost × 100.

Worked Example

Buy 100 shares at $50 ($5,000 cost), sell at $75 ($7,500 proceeds) after 3 years, collecting $1.50 per share in dividends ($150). Capital gain = $2,500; total profit = $2,650; total return = 2,650 ÷ 5,000 = 53%. Annualized: (1.53)^1/3 − 1 ≈ 15.2% a year - comfortably above the S&P 500's 10.2% long-run average, so this trade beat the market. Dividends added about 3 points to total return, a reminder of how much income compounds over time.

Common Mistakes

Confusing total return with annualized return - a 53% gain over three years is only about 15% a year, not 53%.

Leaving out dividends, which can be 30–50% of long-run total return for steady payers like Coca-Cola or Realty Income.

Comparing a total-return figure (which includes dividends) against a price-only S&P benchmark.

Judging multi-year results in nominal terms while ignoring inflation, which has averaged roughly 3% a year.

Tips & FAQ

The S&P 500 has returned about 10.2% nominal (roughly 7% real) annually since 1928, and beating it consistently is rare - most professional managers fail to. On taxes: gains held more than a year get the 0/15/20% long-term rates while shorter holds are taxed as ordinary income, qualified dividends get long-term rates, and REIT or MLP distributions are ordinary income. This tool uses a single buy and sell price, so for positions built over many purchases use weighted-average cost, and remember the dividend field expects total per-share dividends received, not the annual rate. Educational only, not investment advice.

Annualized Stock Return (CAGR) Calculator

Frequently Asked Questions

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