Total Return (TR) and Total Return for All Shareholders (TRAS). Difference for the Companies in the S&P 100

Abstract

The Total Return (TR), also called “return including dividends” and “Total Index Return” provides the theoretical return of a share, assuming that dividends are re-invested to purchase additional shares.

The Total Return for All Shareholders (TRAS) is the return that all the shareholders of a company had in a period. It is also the return of a shareholder that always had a constant proportion (ie. 0,1%) of the shares. It takes into account not only the dividends, but also the share repurchases and the capital increases.

We calculate both returns for the S&P 100 companies in the period December 2004 – April 2020. For 18 companies, annual TR exceeded annual TRAS in more than 1% (i.e. Blackrock 3,9%, Microsoft 2%). For 19 companies, annual TRAS exceeded annual TR in more than 1% (i.e. Citigroup 7,8%, Altria 5,4%).

Most databases provide the Total Return (TR) valid for a shareholder that reinvested 100% of the dividends, did not sell any share in repurchases and did not subscribe any new share when the company increased capital.

Keywords: Total Return, Total Return for All Shareholders, S&P 100, Share Repurchases

JEL Classification: G12, G31, M21