Hi everyone,
I’m new to the PP app and community.
I’m now populating my portfolio and was surprised to understand that dividends are not considered in the stats of profit/loss for a given trade, nor in the implicit return on the investment. Does this make any sense? Is there a workaround to have dividends considered?
Many thanks to all.
What is “the implicit return on the investment”?
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This is pretty much corporate finance 101: an investment in shares provides return via (i) dividends distributed to shareholders; and (ii) share price appreciation. As such, it seems only logical that tracking the return on the investment (aka profit made on the investment) would take into consideration dividends received. Am I missing something here?
Assume that you buy stock in company XYZ for USD 100. One year after that investment, you receive USD 10 in dividends and then sell the stock for USD 100. Your return over one year would be 10%.
Yes, it is. What is your problem with that?
No problem, except that the performance stats provided by the PP app don’t seem to include dividends as part of the profit calculation, so in my example the return would show up as 0% (and not 10%)
Your impression is wrong.
Hello, I understand that it is available at security level through the Absolute Performance metric.
Absolute performance: a performance measure that assesses the overall gain or loss of an investment over a specific period; = (Market value at end of period + Sell/outbound deliveries + Dividends) - (Taxes + Fees + Initial valuation + Buy/inbound deliveries). Synonym: total return.
Available also in %, Abs Perf %:
But you mean that it should also be available at trade level ? With your example :
10 % in Abs Perf and in TTWROR at security level, but 0% in the closed trade Return.
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Corporate finance deals with internal company transactions. The accounting metrics of portfolio management have nothing to do with such internal transactions.
I don’t understand what you’re missing. Reinvested dividends are included in the performance calculation.
Cheers, Laura
No. Trades are trades and only care about buy/sell. Performance is performance.
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Thanks Veterini, the clarification is much appreciated! Best regards
