A price-only change describes one component of a holding's result. If cash income was also received, a fuller accounting needs that amount too. The original numbers below are fictional and are used only for general arithmetic literacy.
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Define what the endpoint value contains
Suppose a hypothetical share starts a stated period at forty currency units and ends at thirty-eight. During that period its holder receives three units of cash dividend, kept separately without reinvestment.
Assume one unchanged share, no additional contributions or withdrawals, one currency and no taxes or fees. The endpoint price of thirty-eight excludes the separate cash already received.
Calculate the components on a common base
The price change is 38 - 40 = -2 units, or -5% of the starting forty. The cash income is three units, or 7.5% of the same starting value.
Combining the two gives -2 + 3 = +1 unit, or +2.5%. Equivalently, the ending share value plus retained cash is 38 + 3 = 41, compared with the original forty.
Avoid changing the denominator or counting twice
Dividing the one-unit result by thirty-eight would use a different base from the starting-value calculation. Label the base before interpreting a percentage.
If an endpoint account total already included both the share and the cash and was reported as forty-one, adding the three units again would double-count the distribution. First identify exactly what each reported value includes.
Keep the model limited
The example does not say dividends are guaranteed or that a distribution creates costless wealth. Actual outcomes also involve changing prices, payment timing, costs and other conditions. The stated period is not automatically one year, so 2.5% should not be labelled an annual return without further information.
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