I recently did some calculations, as follows, but I think something has to be wrong. I was trying to compare long term performance of RVT and SPY using Yahoo Finance. So SPY goes back to 1993, RVT back further, so I started with the first date SPY was on Yahoo Finance, which is 1/29/93. Its adjusted stock price back then was 25.55. Then its adjusted stock price yesterday was 398.17. Then, when I clicked on dividends for that same period, I added all those up, and it shows a total of 81.85 of dividends. So, 398.17 plus 81.85 equals a total finishing balance, if you started with one share of stock, or $480.02 Then 480.02 minus 25.55 equals 454.47, and 454.47 divided by 25.55 equals 17.79, or a 1779% return over that period. Now, when I do that same calculation for RVT, it get a WHOPPING 4598% return over that same period. That has to be wrong. I highly suspect its because of how they give their dividend numbers, that somehow it is an apples-to-oranges comparison. Thanks for any help!
So, I think maybe the issue is this. It gives actual dividends amounts. If I include those total dividend amounts it is vastly over stating my return because I am calculating my return based on adjusted stock prices, which takes into account stock splits/dividends, etc. When I divide the initial very small adjusted stock price by the initial actual start price, I get a percentage. Then when I apply that percentage to the total dividends received over the total period, getting a much smaller total dividends, my returns drop substantially. But more importantly, they seem to make much more sense. When I do that for SPX I get a total return of 1645%, and for RVT I get 1600%. That seems to be very much within the realm of reason. But is it right?
%% Speed read[or slow read] the annual reports. YHOO is known for in\accurate data. I like YTD%\ weekly\ 1 year, 3 year, 10 year+\ all data %.................PS\ it does get a bit complex with splits,[see annual reports] ;but NO way is RVT beating SPY that much\[even with that yield]; i checked charts.
The adjusted price includes dividends and splits. To calculate your total return you simply divide the current price by the original adjusted price. For RVT: 11/19/1986: $0.6372 (adjusted price) 5/10/2022: $14.4162 Growth = 22.6x (over 35.5 years) CAGR = 9.2% (compounded annual growth) For SPY: 1/29/1993: $25.547979 (adjusted price) 5/10/2022: $397.26 Growth = 15.55x (over 29.5 years) CAGR = 9.75% The SPY has performed slightly better when comparing apples to apples.
Oh wow Gary, thanks so much. So if the adjusted prices take into account the dividends, I would guess they just assume you reinvest the dividend in the stock as soon as its paid, hat sort of thing? Thanks!
"Total Return" charts effectively reinvest the dividend at the close of the day prior to the ex-dividend (i.e. as soon as you're entitled to it), which can be some weeks prior to then actual payment day. If you've studied accounting, it's a bit like accrual accounting where you book income as soon it's invoiced, not when you get actually get paid. For a backtest it doesn't make much of a difference for ordinary types of systems/portfolios.