Saturday, 29 April 2017

Return Characteristics of Equity Securities

The two main sources of an equity security's total return are:

  • Capital gains from price appreciation
  • Dividend income
The total return on non-dividend paying stocks only consists of capital gains.

Investors in depository receipts and foreign shares also incur foreign exchange gains (or losses).

Another source of return arises from the compounding effects of reinvested dividends.

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