2

What is the best way to calculate the total yield of a stock portfolio?

I started managing my own investments last year and it looks like I leaned towards dividend investing. I am wondering how I can calculate the total yield of a portfolio.

Is there a simple (less accurate) formula for estimating?

Anyone know any online tools to do this?

3

The simplest was is to just divide your total dividends for the year by your starting capital for that year. For example, if you start with $100000 in capital and earn $5000 in dividends during the year your dividend yield for that year would be 5%. Even if you haven't fully invested your total capital during the year it is still available to be invested and the total should be used for the calculation.

Once the year has ended you will have a new balance for you capital, which is the value you should use in the following year.

An alternative to this calculation is to use your average capital for the year, add your starting and ending capital values and divide by 2. You may want to use this method if you trade often during the year instead of buying all your investments only at the start of the year.

Also, another thing to consider is whether you include the dividends as additions to your capital or if you withdrawal dividends when they are paid for your own cashflow. If you reinvest your dividends, then they should be included as part of your capital.

  • This is a wrong answer. What you are mentioning is returns and not yield of a portfolio. Returns and yield are 2 different things. – DumbCoder Jan 22 '15 at 10:40
  • 1
    @DumbCoder - the OP has asked for a simple formula for estimating. And I am not calculating the returns I am calculating the total dividend in a year over the capital. If you invested a full $100,000 in various stocks at the start of the year and you received $5,000 in dividends during the year then your dividend yield for the portfolio would be 5%. I am not including any capital gains earned during the year, if I did then this would be the returns. – Victor Jan 22 '15 at 12:54
  • If you invested a full $100,000 in various stocks at the start of the year and you received $5,000 in dividends during the year then your dividend yield for the portfolio would be 5% Sorry mate, you have got it all wrong. You don't calculate dividend yield of a portfolio, but of a stock.You calculate the yield of a portfolio. What you have jotted down is the returns, you accept it or not isn't my problem. The numbers you get might be near to each other(because it is simple), maybe same also, but this isn't the correct way to do it. – DumbCoder Jan 22 '15 at 13:06
  • Extrapolating the dividend yield, of the stocks in a portfolio, to a portfolio doesn't make it the yield of a portfolio. In simple terms you may consider them the same but that isn't correct way to do it. – DumbCoder Jan 22 '15 at 13:08
  • 2
    @Victor Thank you. This is what I was looking for. I will be adding / readjusting frequently so this will help just to get a rough idea of where I stand. – leeman24 Jan 22 '15 at 17:57

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .