# How to Calculate Common Stock for Holding Period Returns

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A holding period return on a stock investment is the change in value of the stock plus the amount of dividends received during a particular period as a percentage of the initial purchase price. The value of stock for a holding period calculation depends on the number of shares owned and the price per share at the beginning and end of the holding period. A greater price appreciation and higher dividend payments result in a higher holding period return. A higher holding period return represents a more profitable investment, while a negative holding period return represents a losing investment.

Determine the holding period for which you want to measure your return, the number of shares purchased, the price per share, the price per share at the end of your holding period, and the dividends per share during the holding period. For example, assume you bought 100 shares of a stock for \$5 per share and the shares are worth \$7 per share at the end of a two-year holding period. Assume you received a total of \$0.50 per share in dividends during the holding period.

Multiply the number of shares you bought by the purchase price per share to calculate the total purchase price. Then multiply the number of shares by the price per share at the end of the holding period to calculate the total ending price. In this example, multiply 100 by \$5 to get a total purchase price of \$500. Then multiply 100 by \$7 to get a total ending price of \$700.

Multiply the number of shares by the dividend per share to calculate the total dividends you received during your holding period. In this example, multiply 100 by \$0.50 to get \$50 in total dividends.

Subtract the total purchase price from the total ending price. Then add the total dividends you received during the holding period to your result. In this example, subtract \$500 from \$700 to get \$200. Then add \$50 to \$200 to get \$250.

Divide the result by the total purchase price to calculate the holding period return. A positive result represents a positive holding period return, while a negative result represents a negative holding period return. In this example, divide \$250 by \$500 to get 0.5, or a 50 percent holding period return.