# How to Calculate Rate Earned in Common Stock

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Investing in common stock allows you to purchase a small fraction of a company and watch your investment grow as the company profits. Common stock generates returns not only by growing, but also through paying dividends -- so account for both when figuring the rate of return it earns.

## Step 1

Subtract the price you paid for the stock from the selling price. If you still own the stock, use the current price instead. For example, if you paid \$30 and it's now worth \$33, subtract \$30 from \$33 to get a gain of \$3.

## Step 2

Add any dividends received while you owned the stock to the gain from the price increase. In this example, if you received another \$1.50 in dividends while owning the stock, add \$1.50 to \$3 to find your total gain is \$4.50.

## Step 3

Divide your gain by the price you paid for the stock to calculate your rate of return. In this example, divide \$4.50 by \$30 to find the rate of return equals 0.15, or 15 percent.