On this page is a Dow Jones return calculator for investment returns on the Dow Jones Industrial Average with a unique benefit not found anywhere else – it allows you to estimate the return contribution of dividends reinvested in the index, and for inflation!
Also! Try our individual stock Graham Number calculator or our individual stock dividend reinvestment calculator. If you want to look at DJIA returns over aggregated periods, this calculator will do the work.
The Dow Jones Industrial Average Dividends Reinvested Price Calculator (With Inflation Adjustment)
Editor: September is 9/12 Close
As we discussed in our original dividends reinvested calculator on the S&P 500, a common problem with investment news is the inability of financial journalists to produce fair comparisons for investor returns. Many articles quote returns using only the price index, completely ignoring the very large effect of reinvested dividends on the returns for the average investor. Here’s the key to this calculator:
- Total Dow Jones Industrial Average Return – The total price return of the Dow Jones Industrial Average. If it is, for example, 500 on the start and end date… this will be 0%.
- Annualized Dow Jones Industrial Average Return – The total price return of the Dow Jones Industrial Average (as above), annualized. This number basically gives your ‘return per year’ if your time period was compressed or expanded to a 12 month timeframe.
- Total DJIA Return (Dividends Reinvested) – The total return of the Dow Jones Industrial Average if you had reinvested all of your dividends.
- Annualized DJIA Return (Dividends Reinvested) – The total return of the Dow Jones Industrial Average if you reinvested dividends. Just like with the price index, it is just the annualized return of the box above it.
- Inflation Adjusted (CPI)? – This is just an informational box – it will remind you if you ran the calculator with inflation (in the form of CPI) factored in, or with inflation ignored.
Methodology for the Dow Jones Return Calculator
As a disclaimer, this information is for research and educational purposes only, and is derived from many sources (listed below) and compiled into the data used in the calculator. We can make no guarantees to its accuracy, and you should verify any results with other sources. Importantly, all numbers are approximations of actual investor performance had the investor reinvested dividends monthly. Also importantly: we are completely ignoring the drag of fees, taxes, timing, slippage, and the hundreds of other small effects on actual investor performance. None of the data in our calculator matches any exact dividend payout dates nor index closing prices on any individual date.
If you want actual Dow Jones Industrial Average data for other purposes, you should go to McGraw Hill Financial’s S&P Dow Jones Indices, the owner of the Dow Jones Industrial Average (the 30 companies themselves are selected by editors of the Wall Street Journal). Nothing on this page should be construed as investment advice – we’re not financial advisors, so please talk over any financial decisions with a qualified advisor.
Before you complain about these limitations, remember Carveth Read’s advice (often mis-attributed to John Maynard Keynes): “It is better to be vaguely right than exactly wrong.“. For educational purposes, we’re happy with how this Dow Jones return calculator turned out.
Here are the important things to note:
- ‘Month’ is an average – the numbers behind the results do not correspond to particular dates, but on monthly average closing prices on the Dow. Think of it like ‘average investor’ performance had a theoretical investor bought (or sold) in the month you selected. Again, it is not an exact date, there is no exact data in the tool!
- Dividend payouts are approximate – We’ve made guesses at dividend seasonality by using payout timing on the DIA ETF, payout by months on the S&P 500 (as approximated from Amit Goyal of the University of Lausanne’s numbers), and the Cowles Foundation’s implied monthly dividend seasonality on their Industrial indexes. In essence, we guessed the percentage of annual dividends paid in each month, then applied that to our data set – although we truly believe that we are advancing investor education with these derived dividend estimates, it’s important to remember they aren’t exact. If you think this is insufficient for some reason, please tell us why in the comments and let us know how you do it in your calculator.
- Fees are not included – a real investor would likely have paid fees for various things like account maintenance, buying, selling, reinvestment, etc.
- Taxes are not included – considering the proliferation of accounts in the United States which allow taxes to be avoided or deferred, maybe this isn’t an issue, but keep that in mind while playing with the calculator.
Sources for the Dow Jones Return Calculator
- McGraw Hill Financial S&P Dow Jones Indices
- Stooq Dow Jones Industrial Average Page
- Cowles Foundation for Research in Economics
- State Street Global Advisors “DIA” ETF (And Prospectuses available on SEC’s EDGAR website)
- Amit Goyal’s web site
We build this Dow Jones return calculator for educational purposes since it proves a powerful point – dividends really do make a huge difference to investor returns! Say we go back and invest $1 in the beginning month on the Dow Jones – May of 1896, and we run the numbers through December of 2014:
If you don’t count dividends, you end up with $437.43. Excellent.
If you do count dividend reinvestment? Well – it’s a whole other ballgame; you end up with $84,638.46.
So, yes, folks should stop assuming that investors are just throwing their dividend checks in the fireplace. It makes a lot of difference.