Represents shareholders' gains from a stock over a given period of time. Total return includes both capital gains and losses (the increase or decrease in the stock price) and income (in the form of dividend payments). It is calculated by taking the change in the stock's price, assuming the reinvestment of all dividends, then dividing by the initial stock price, and expressing the result as a percentage. Returns for periods longer than one year are annualized.
Benefit
For ease of use, total returns for periods longer than one year are expressed in terms of compounded average annual returns (also known as geometric total returns). As with non-load-adjusted returns, Morningstar annualizes total returns in order to provide the most accurate account of stock performance.
Origin
Total return is calculated in-house on a daily and monthly basis.