# Total Shareholders' Return (TSR)

The total shareholders' return measures the combined return from change in stock price and dividends.

Investors in stocks earn in two ways – capital gains and current income.

Capital gain refers to the change in market price of the stock. Current income refers to the dividends distributed by the company from its earnings.

## Total Stockholders' Return Formula

The formula in computing for the total stockholders' return (TSR) is:

 TSR = Capital gains + Current income Initial stock price

or

 TSR = Change in market price + Dividends Initial stock price

## Examples

1. Mr. X purchased 1,000 shares of a publicly listed company for \$10 per share. The company declared a cash dividend of \$0.50 per share. Mr. X received the dividends. After a year, he sold all the shares for \$12 each. Compute for the total stockholders' return.

 TSR = Change in market price + Dividends Initial stock price = (\$12 - \$10) + \$0.50 \$10 TSR = 25%

2. ABC Company's shares were selling at a market price of \$220 per share at the beginning of the period. At the end of the year, the market price of the stock increased to \$255. The company declared cash dividends of \$4 per share. Compute for the total return to the company's stockholders.

 TSR = Change in market price + Dividends Initial stock price = (\$255 - \$220) + \$3 \$220 TSR = 12.73%
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