# How to Calculate Portfolio Returns With Dividends ••• Jupiterimages/Photos.com/Getty Images
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Investors make money from buying stocks in two ways: one, by holding stocks that increase in price and two, by holding stocks that pay dividends. If a stock in your portfolio grows in price and pays a dividend, you gain both ways. When calculating the performance of your portfolio, your rate of return must account for both types of gains. Knowing your portfolio returns helps you compare the performance of different investments so that you can maximize your returns.

Add the ending value of your portfolio to the dividends you received during the year. For example, if, at the end of the year, your portfolio value equals \$6,900 and you received \$125 in dividends, add \$6,900 to \$125 to get \$7,025.

Subtract the beginning value from ending value plus dividends. For example, if your portfolio started at \$6,770, subtract \$6,770 from \$7,025 to find the gain equals \$255.

Divide the gain or loss by the beginning value to find the portfolio rate of return. In this example, divide \$255 by \$6,770 to get 0.0377.

Multiply the portfolio rate of return to find the percentage return on your portfolio, including dividends. Finishing this example, multiply 0.0377 by 100 to get 3.77 percent.