The S&P 500 Price index returned +18.74% in 2017. Using a better calculation which includes dividend reinvestment, the S&P 500 returned +21.14%.
The 2017 S&P 500 Return: Buy, Hold and Reinvest
The above quoted numbers are accurate if you bought the index at the opening price on January 3rd, 2017 and sold at the closing price on December 29, 2017. If you’d prefer the numbers buying at the December 30, 2016 closing price the return would be +19.42% and +21.83%, respectively.
Here are the index price returns:
|Price Return From||Open||Close||Gain|
|Jan 3, 2017 Start||2251.57||2673.61||18.74%|
|Dec 30, 2016 End||2238.83||2673.61||19.42%|
Following are the dividend reinvested returns:
|Dividend Reinvested Return From||Open||Close||Gain|
|Jan 3, 2017 Start||4303.12||5212.76||21.14%|
|Dec 30, 2016 End||4278.66||5212.76||21.83%|
Whichever set of return time-spans you prefer, the message is the same as last year’s: dividends matter. If you invest in funds or stocks that pay a dividend you’ll have to choose what to do with the payouts. Simply quoting price returns without regard to real returns in cash form doesn’t reveal the true impact of an investment.
Source on the 2017 S&P 500 Return Calculations
These numbers come from S&P Dow Jones Indices, the owner of the S&P 500 Index. They have both the classic S&P 500 price index as well as the dividend reinvested numbers from 1987 forward.
Reading this and want more? We haven’t built a daily resolution calculator, but we have built a few monthly resolution calculators for the S&P 500:
- S&P 500 Dividend Reinvestment Calculator
Lump sum investment return calculator.
- S&P 500 Periodic Reinvestment and Dividend Calculator
A calculator which also layers in estimates for fees and taxes. It allows periodic scheduled additions to an investment.
- S&P 500 Historical Return Calculator
This calculator works on constant time-frames in the S&P 500 dataset, calculating an ordered set of returns.
- CAPE Calculator
Computes the 10-year PE ratio of the S&P 500 index. Also lets you change the period of returns to include in the data.
The 2017 S&P 500 Return
Adding dividend reinvestment to the math moved the needle from under 20% to over the psychological barrier. (Due to round number bias, it’s a significant difference to us humans). It’s also the right way to look at the returns.
Unless you burned the dividends you received in 2017, you had to make some decision on what to do with that cash. Nowadays, many investing accounts allow you to automatically reinvest these dividends, giving you returns that closely approximated the numbers quoted here.
Of course, your mileage may vary. Taxes, slippage, timing, fees, availability and other factors would have changed your exact results… but the point remains. Dividend returns are real returns and it was an excellent year for the stock market.
What do you see the S&P 500 doing in 2018?