An investor buys 100 shares of a stock at $45 each. After one year, the stock appreciates by 20%, but the investor also receives a dividend of $2 per share. What is the investor's total return on investment after one year?

Investment Return Breakdown: How Much Did the Investor Really Earn?

When investing in stocks, understanding both capital appreciation and dividends is crucial to calculating your true return on investment (ROI). This article walks through a practical example of a one-year investment strategy: buying shares, watching them appreciate, and collecting dividends.

Understanding the Context

The Investment Setup

An investor purchases 100 shares of a stock at $45 per share. At the end of the year:

The stock price increases by 20%
The investor receives a $2 dividend per share

An investor buys 100 shares of a stock at $45 each. After one year, the stock appreciates by 20%, but the investor also receives a dividend of $2 per share. What is the investor's total return on investment after one year?

Key Insights

Step 1: Calculate the Purchase Cost

Total initial investment =
100 shares × $45 = $4,500

Step 2: Calculate the Sale Proceeds After Appreciation

A 20% increase on the original price of $45 raises the share price to:
$45 × 1.20 = $54

🔗 Related Articles You Might Like:

📰 Steve Zahn’s Secret Movie Magic: You Won’t Believe His Hidden TV Shows! 📰 Shocking Steve Zahn Movies You’ve Never Seen – Watch Now for the Ultimate Twist! 📰 From Seed to Star: Behind Steve Zahn’s Next Big Screen & TV Breakthrough! 📰 Discover The Shocking Truth About Para You Wont Believe What Happened Next 📰 Discover The Shocking Truth About Piya Rais Hidden Secret That Will Blow Your Mind 📰 Discover The Shocking Truth Behind Parasite The Maxim You Wont Believe What Happens Next 📰 Discover The Shocking Way To Eat Pitaya That Every Foodie Swears By 📰 Discover The Shockingly Beautiful Hidden Shoreline Oval Beachs Untamed Beauty 📰 Discover The Stunning Patagonia Map Every Hidden Trail And Hidden Gem Revealed 📰 Discover The Stunning Ritro Of Pietra Dawn Cherniak You Wont Believe Its Hidden Power 📰 Discover The Super Charged Secret To Perky Tits That Will Blow You Away 📰 Discover The Surprising Plural Of Axisyou Wont Believe What It Is 📰 Discover The Tastiest Philly Cheesecake Filling Thats Dominating Social Media Now 📰 Discover The Top 5 Quilt Patterns That Everyones Obsessed Withstep Into The Trend 📰 Discover The Top 7 Plants That Will Turn Your Garden Into A Hummingbird Magnet 📰 Discover The Ultimate Blueprint For Perfect Chaos Chaos That Blows Your Mind 📰 Discover The Ultimate Collection Of Pinup Tattoos With Scars Ink Magic 📰 Discover The Ultimate Guide To Petite Formal Dresses That Steal The Spotlight

Final Thoughts

Selling 100 shares at $54 each yields:
100 × $54 = $5,400

Step 3: Calculate Total Dividend Income

The investor receives a $2 per share dividend, so total dividend income is:
100 shares × $2 = $200

Step 4: Compute Total Return

Total return = Sale proceeds + Dividends – Initial investment
= $5,400 + $200 – $4,500
= $1,100

Step 5: Calculate Percentage Return on Investment (ROI)

Return on investment (ROI) percentage is:
(Total Return / Initial Investment) × 100
= ($1,100 / $4,500) × 100
≈ 24.44%