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2015 NASDAQ Dividend Reinvested Return

Written by:
PK

Many other sites report that the NASDAQ returned +5.19% in 2015.  On the contrary: with dividends included and reinvested, the 2015 NASDAQ Return was +6.40%.

Although including dividend reinvestment didn't switch a supposed loss into a gain (like it did with the S&P 500's 2015 return and the Dow Jones's 2015 return), it does show a nice bonus over what many financial media sites are quoting.

It's Important to Factor Dividends Into Returns

We love to do these sorts of articles not only to lecture the financial media, but to point out that the common knowledge is wrong on this point.  Since investors in stocks and mutual funds will be receiving dividends, unless said investors are disposing of their checks in the garbage or the fireplace we need to make some sort of effort to factor them in.

This site has been banging this drum since early 2012, when we first released our S&P 500 Reinvestment Calculator.  That calculator has monthly resolution and goes back to well before the S&P 500 actually existed, thanks to the work of Robert Shiller.

Unfortunately, we don't have a similar calculator for the NASDAQ - but put a pin in it, it would be a definite nice to have.  However, for shorter time periods we can use NASDAQ's own total return index, as we did here.

The 2015 NASDAQ Return

We like to get our data on the NASDAQ's total return from Marketwatch.  Once you include the NASDAQ and the NASDAQ Total Return Index, you get a graph that looks like this:

2015 NASDAQ Return: Total vs. Index

2015 NASDAQ Return: Total vs. Index

And, as per tradition, the same data in chart form:

01/02/2015 Open12/31/2015 CloseAnnual Return
NASDAQ Total Return5284.135622.566.40%
NASDAQ Index4760.245007.415.19%

Exact is Good - And Exact Includes Dividends

Over long periods of time, dividends actually end up dominating total return data since there is a compounding effect with more and more purchased over time.  It ends up being an absurd amount - from 1950 to 2012, almost 90% of the total return on the S&P 500 was due to reinvested dividends.

So, yes, we're going to be exacting in these pieces.  I hope this helps!

Here are NASDAQ returns in other years:

Key questions:

  • What are your predictions for the NASDAQ in 2016?
  • Why do journalists not include dividends in their return calculations?

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