Capital Gains Yield Calculator
Price return percentage, with or without dividends.
Capital gains yield
Estimates for planning only, not financial advice.
Capital gains yield is the purest measure of price performance: how much an asset appreciated, as a percentage of what you paid. The formula is (sale price minus purchase price) divided by purchase price. Buy at $50, sell at $68, and the yield is 36%. Add dividends to get total return, and annualize over the holding period to compare investments fairly. This calculator shows all three: the price yield, the dividend kicker, and the annualized rate.
How to Use This Calculator
Enter the purchase price per share using your true cost basis, including commissions and adjusted for any splits. Enter the sale price or the current price if you are evaluating an open position. Add total dividends received per share over the holding period, and the holding period in years for the annualized figure. The results separate price return from income return so you can see what actually drove performance.
Enter split-adjusted purchase price including fees. Your brokerage\'s cost-basis figure is the right P0.
Enter the sale or current price and total dividends per share received while holding.
Read capital gains yield, dividend yield, total return, and the annualized rate. Compare the annualized number to your benchmark, not the raw percentage.
The Formulas
Capital gains yield isolates the market\'s verdict on the asset: did the price go up. Dividend yield isolates management\'s cash discipline. Total return is what your wealth actually did. Annualizing matters because a 36% gain over 3 years (10.8% annualized) is a very different achievement from 36% in 3 months. Always compare annualized figures when holding periods differ, or the longer hold wins by arithmetic rather than skill.
Worked Example
You buy a stock at $50 and sell 3 years later at $68, collecting $2 per share in dividends along the way. Capital gains yield is ($68 - $50) / $50 = 36%. Dividend yield is $2 / $50 = 4%. Total return is 40%. Annualized, the price return is ($68 / $50)^(1/3) - 1 = 10.8% per year. Against a 10% market benchmark, this investment roughly matched the market on price and beat it slightly with dividends included, before tax.
Yield in Context
| Measure | What it tells you | Watch out for |
|---|---|---|
| Capital gains yield | Price performance alone | Ignores dividends; flatters growth stocks |
| Dividend yield | Cash income vs price paid | High yield can signal a falling price |
| Total return | Actual wealth change | Pre-tax; holding period skews comparisons |
| Annualized return | Comparable yearly pace | Assumes smooth compounding |
A high dividend yield deserves skepticism, not celebration: yield rises when the price falls, so a 9% yield often means the market expects a dividend cut. Likewise, a soaring capital gains yield on a short hold may be luck, not edge. The honest evaluation uses all four rows together over multiple years. For the tax side of realized gains, our UK capital gains tax calculator covers British rates, our average return calculator annualizes return series, and our inflation calculator converts nominal gains to real purchasing power.
Estimates for planning only, not financial advice.
Frequently Asked Questions
What is capital gains yield?
Capital gains yield is the percentage price appreciation of an investment: (sale price minus purchase price) divided by purchase price. Buy at $50, sell at $68, and the capital gains yield is 36%. It measures the price move only, excluding dividends or interest. Add the dividend yield to get total return.
What is the formula for capital gains yield?
Capital gains yield = (P1 - P0) / P0, where P0 is the purchase price and P1 is the ending price. For a $50 purchase sold at $68: ($68 - $50) / $50 = 0.36, or 36%. If you received dividends, total return = capital gains yield + dividend yield, where dividend yield is dividends received divided by P0.
What is the difference between capital gains yield and total return?
Capital gains yield covers price change only; total return adds income received along the way. A stock bought at $50, sold at $68, that paid $2 in dividends has a 36% capital gains yield and a 40% total return. Growth stocks live almost entirely on capital gains yield; dividend stocks split the return between the two. Judge each against the right benchmark.
Can capital gains yield be negative?
Yes, whenever the sale price is below the purchase price. Buy at $50 and sell at $42, and the capital gains yield is -16%. Negative yield is simply a capital loss expressed as a percentage. For tax purposes that loss can offset gains elsewhere, which is why investors harvest losses before year-end.
How do you annualize capital gains yield?
For multi-year holds, convert to a compound annual growth rate: (P1 / P0)^(1 / years) - 1. A 36% gain over 3 years annualizes to about 10.8% a year, not 12%, because compounding works on a growing base. Our average return calculator runs the geometric-mean math for return series, and the logic is identical.
Does capital gains yield include stock splits?
Adjust the purchase price for splits before calculating. If you bought at $100 and the stock split 2-for-1, your cost basis per share is $50, not $100. Failing to adjust makes the yield look far worse than it is. Brokerage statements usually show split-adjusted cost basis; use that number as P0.
What is a good capital gains yield?
Compare against the market, not against zero. The US stock market has returned roughly 10% a year nominally over long periods, so a 36% one-year gain beats the market soundly while a 4% year lags it. Also compare against your own required return: beating inflation by your target margin is the real hurdle. A "good" yield is one that clears your benchmark after tax.
How are capital gains taxed in the US?
Short-term gains on assets held one year or less are taxed as ordinary income; long-term gains get preferential rates of 0%, 15%, or 20% depending on income, plus a possible 3.8% net investment income tax at higher incomes. The one-year holding line is the most valuable date on the calendar: crossing it can cut the tax rate by more than half. State taxes apply on top.
Should I use adjusted cost basis?
Yes. P0 should be your total cost including commissions and fees, not just the quoted share price. A $50 stock with a $10 commission on 10 shares really cost $51 per share all-in. Reinvested dividends also raise your basis, which lowers the taxable gain later. Sloppy basis records are how people overpay tax on investments they held for years.
What is the dividend yield vs capital gains yield tradeoff?
Mature, cash-rich companies tend to pay higher dividends with slower price growth; young growers reinvest everything and deliver return almost entirely as capital gains yield. Neither is inherently better: dividends are taxed yearly as received while capital gains compound untaxed until sale, which favors growth in taxable accounts. In retirement accounts the distinction mostly vanishes.