Learn / Understanding investing
Total return: price, dividends and premiums
Why did I earn more or less than the share price suggests?
Video coming soon
In this lesson
- The share price tells only part of the story. Dividends and option premiums are income too. If you only look at the price, you often underestimate what a position earned.
- Total income adds up every part. It includes the realized gain, the option premium and the dividends minus withholding tax. Rendity shows it for each stock, also for stocks you no longer hold.
- Realized and unrealized are two different things. Total income counts what has already happened. The unrealized P&L of a stock you still hold sits next to it and has not been booked yet.
The example: Keurig Dr Pepper
You buy 200 shares of Keurig Dr Pepper at $29.91 and later 200 more at $25.75. So you paid an average of $27.83. You sell all 400 at $30. The price gain after fees is $866.
While you hold the shares, you sell four rounds of calls. According to Rendity they bring in $417.40 after fees. On top of that come nine dividends of $546, minus $81.90 US withholding tax.
Total income comes to $1,747.50. That is twice what the price alone suggests. Because the stock is sold, Rendity lists it under “Previously held”.
Realized and unrealized are two different things. Total income in Rendity counts what has happened. An unrealized loss is still money that is working for you right now. It just has not been booked yet.
Sample account, not real data, not investment advice.
Where to find it in Rendity
On the Positions page, the Total Income column shows the income for each stock, with sold stocks under “Previously held”. On a stock's position page, the cards at the top show Realised gain, Option Premium, Dividends and Withholding Tax. The Unrealised P&L sits next to them.
Included inSeed Sprout Tree Orchard
Terms from this lesson
Education only, not investment advice. Tax topics are not tax advice.