How to Calculate Rate Earned in Common Stock

Stock price is only half the equation when figuring returns.
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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.

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