Holding Period Return Calculator

The holding period return (HPR) calculation breaks down investment performance into two primary components: capital gains and dividend income yield. First, the capital gain is determined by subtracting the initial purchase price from the current asset price, then dividing that difference by the bought price: cap_gain = (current_price - bought_price) / bought_price. Next, the dividend yield is calculated by dividing the total dividend income received by the original purchase price: div_yield = div_income / bought_price. Finally, the total holding period return is the sum of these two ratios: hpr = cap_gain + div_yield.

Imagine you purchased shares of a stock for $200 (bought price). Over the course of the year, the stock price rose to $230 (current price), resulting in a capital gain of $30 per share. Additionally, the company paid out a total of $10 per share in dividends (div income) during your ownership. First, compute the capital gain: ($230 - $200) / $200 = 0.15 or 15%. Second, calculate the dividend yield: $10 / $200 = 0.05 or 5%. Adding these two figures together gives your total holding period return: 15% + 5% = 20% (or an HPR of 0.20).

When analyzing your investments, always ensure that your dividend income accurately reflects the entire duration you held the asset rather than just an annualized figure. Keep in mind that the holding period return does not annualize your gains, meaning a 20% return over six months is very different from a 20% return over five years. For multi-year investments, consider using annualized return metrics alongside your HPR to compare different assets on an equal timeframe.