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2020 Dow Jones Industrial Average Return

Written by:
PK

The Dow Jones Industrial Average returned 6.87% in 2020. Using a better calculation, which includes dividend reinvestment, the Dow Jones returned 9.70%.

2020 Dow Jones Industrial Average Return: Reinvest Your Dividends

I ran the above calculation for an index purchase at open on January 2nd, 2020 and sold at close on December 31, 2020. This would match the year-to-date return if you looked on the last of the year.

Alternatively, you might like a one-year holding proxy. If you bought the closing price on December 31, 2019 and sold the close on December 31, 2020 the returns would be 7.25%9.72% with dividends reinvested.

Dow Jones 2020 Index Returns

Price FromPriceDec 31 CloseGain/Loss
Jan 2 Open28638.9730606.486.87%
Dec 31 Close28538.4430606.487.25%

Dow Jones 2020 Total Return Index Returns

Price FromPriceDec 31 CloseGain/Loss
Jan 2 Open64517.4470778.109.70%
Dec 31 Close64505.4870778.109.72%

The takeaway message? The exact date doesn't really matter. However, dividends matter.

You can see the effects of reinvesting over a single year – ~ 2.83%. And even if you didn't reinvest, you'd still have to do something with your dividends (or use the checks to start a fire to heat your house, I guess!).

Investing in the Dow Jones Price-Weighted Stock Index

Most stock indices nowadays are market capitalization weighted, (e.g., the 2020 S&P 500 Return). The Dow Jones Industrial Average is a price-weighted index, by contrast.

Price-weighted indices derive their actual trading prices by the trading price of the underlying company shares times some individual stock factor.

Price weighting is not a great indexing method. However, I'm not here to doubt its usefulness – in 1896, it was easier to track price changes than up-to-the-minute market capitalization. Also, it has historically tracked other indices pretty well... so Dow Jones got a ton right.

Source on the 2020 Dow Jones Industrial Average Return Calculations

Data is sourced from the Dow Jones Indices, owned by S&P Dow Jones Indices. There you'll find both the price index and total return index.

Want even more? DQYDJ has you covered – both investing content, and some Dow Jones specific posts:

See DJIA returns in other years:

How do you see the Dow Jones Industrial Average performing in 2021?

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