Nikkei Return Calculator, with Dividend Reinvestment

Below is a Nikkei Return calculator with dividend reinvestment, which can compare estimated investment returns. The return calculator can factor in the Japanese CPI index to adjust returns for inflation. 

Return estimates are quoted in yen by default, or the tool allows adjustment for the yen/dollar exchange rate as well as the United States CPI index to check returns from an American investor's perspective.

This Nikkei return calculator has monthly resolution and our data starts in January of 1950.

Editor: Through 2/1/2023 Close

The Nikkei-225 Dividends Reinvested Price Calculator (With Inflation Adjustment and Dollar Exchange Rate)

For a complete list of all our calculators, for investing and otherwise, go to this page.  Most popularly, we have a S&P 500 Return Calculator as well as a Dow Jones Industrial Average return calculator... both with reinvested dividends. There is also a stock reinvestment calculator for the US and Canada.

The Nikkei 225 is a price weighted index – much like the American Dow Jones Industrial Average – though it has 225 issues to the DJIA's 30. The index is owned by the Nikkei newspaper, formally The Nihon Keizai Shimbun (日本経済新聞). It has been calculated daily since late 1950, and when created it was back-calculated to mid-1949.

Although this calculator leaves out any estimates of taxes and fees and other investment expenses, it includes estimated monthly dividend payments, as well as estimates for the yen/dollar exchange rate and inflation indices (CPI) for both Japan and the United States. This allows you to estimate the index's real return for a domestic or international investor (or both).  There are two sections, toggled by the radio buttons for 'Show Returns in Yen' or 'Show Returns in Dollars':

Nikkei Return Calculator: Show Returns in Yen

• Total Nikkei-225 Return - The total price return of the Nikkei. This would be 0 if the price was 100 at the start and end date.
• Annualized Nikkei-225 Return - The annualized price return of the Nikkei-225, if the above number was equally spread out over years.
• Total Nikkei-225 Return (Dividends Reinvested) - Assuming dividends were reinvested, an estimate of the total percentage return.
• Annualized Nikkei-225 Return (Dividends Reinvested) - Annualized return (geometric mean) of the above total Nikkei-225 return estimate.
• Inflation Adjusted (Japan CPI)? - A reminder whether the currently displayed numbers are factoring in Japan's CPI index for inflation.

Nikkei Return Calculator: Show Returns in Dollars

• Total Nikkei-225 Return (Dollars) - The total price return of the Nikkei once converted to dollars.
• Annualized Nikkei-225 Return (Dollars) - The annualized price return of the Nikkei-225 once converted to dollars.
• Total Nikkei-225 Return (Dividends Reinvested, Dollars) - Estimated total Nikkei-225 return with dividends reinvested, once converted to dollars.
• Annualized Nikkei-225 Return (Dividends Reinvested, Dollars) - Geometric average return of the annualized number calculated above.
• Inflation Adjusted (Japan CPI)? - A reminder whether the currently displayed numbers are factoring in the United State's CPI index for inflation.

Caveats and Methodological Choices for the Nikkei Return Calculator

Please note: This calculator is meant solely for research and scholarship purposes. It gives no exact daily values. The tool attempts to estimate the return of average investors who bought during the starting month then sold during the ending month. It should give a reasonable guess, however, to investor performance ignoring fees, taxes, timing, and other costs. Please verify all results on your own; we accept no responsibility for investment decisions made due to this tool.

As with all of our dividend reinvestment calculators, we've put a lot of work into the initial research for this Nikkei return calculator and weighed the tradeoffs and pros and cons of many different inputs. Most importantly: this calculator has a monthly resolution, and any internal numbers in the tool do not map into an individual date.

That is: questions such as 'which day's closing price was January 1952?' don't have an answer.

Internal to the tool are monthly averages of closing prices. The best way to do an inaccurate (but comparable) 'yearly' estimate of return is to look at, say, a "December to December" or "January to January" closing period.  Do not ask me how many days that is... it's the average closing price. Again: there are no 'daily' prices, with the sole exception of the front month/most recent month data.

We're making lots of assumptions for this tool, out of necessity. It can't entertain "well, what if I only bought on the third Monday?" type theoretical questions. Please go to Nikkei directly for that data, and I will make a link from DQYDJ to your calculator after you build it.

Sources for the Nikkei Return Calculator

Nikkei-225 Index

• Nikkei Index Main Page
• FRED's Nikkei-225 Archives (Use monthly/average)

Note that I use the monthly close prices of the total return index and Nikkei-225. The difference in returns I use to impute a dividend for the month. (Slight negative values I round to zero).

Nikkei-225 Dividends

For dividends before 2000, there are no Nikkei Total Return calculations. These dividends were estimated from a combination of Nikkei datasets and TOPIX data. Here is a total list of sources, including both data and the software used:

• Mason, A.J., “OpenSolver – An Open Source Add-in to Solve Linear and Integer Progammes in Excel”, Operations Research Proceedings 2011, eds. Klatte, Diethard, Lüthi, Hans-Jakob, Schmedders, Karl, Springer Berlin Heidelberg
  pp 401-406, 2012, http://dx.doi.org/10.1007/978-3-642-29210-1_64, http://opensolver.org
• Kazuo Udea, University of Tokyo
• Mike Kennedy, Angel Palerm, Charles Pigott and Flavia Terribile for the OECD
• Legg Mason Newsletter
• Michael D. Bordo, Rutgers University
• Statistics Japan
• Nikkei Total Return Factsheet
• Nikkei Total Return Index
• Notes:
  • Again, note that some points use dividend estimates on the Japanese TOPIX Index owned by the Japan Exchange Group. Others use datasets labeled as 'Japanese Dividends'. I believe they are reasonably close to what we want, but are definitely not exact. If this bothers you, calculate returns on your own.
    
  • When we have overlapping dividend estimates for various months, we used the harmonic mean to estimate the true TTM dividend. To convert TTM dividends to estimated monthly payouts, we used a non-linear programmer in OpenSolver (software listed above) and minimized the sum of errors from the implied TTM.

Inflation & Exchange Rates

• Statistics Bureau Japan
• US CPI is from Robert Shiller's Spreadsheet
• FRED
• Notes:
  • The exchange rate was 360 yen/dollar through 1971.
  • Where data isn't available in the most recent months, we extrapolate by 'dragging (cell expansion)' the previous 2 months forward using Google Docs.
  • The front month data may be a repeat of the last value at the time I update the tool.

For pre-1970 inflation, I used a proxy to back populate the values.

1. There is no-country-wide data (that I could find), so I used the Ku-area of Tokyo inflation index, table 17, from the Statistics Bureau of Japan. The widest index available for those dates is "All items, less imputed rent"
2. Each annual inflation reading I mapped to January of that year, and took data from 1950-1990.
3. I used the "Table 1-2 Subgroup Index for Ku-area of Tokyo" "All items, less imputed rent" to get January monthly data from 1970-1990
4. I found the average divisor between the overlapping indices: 18.92481077
5. I used that divisor to run the index back to January 1950, then interpolated to find the other months
6. From January 1970 forward I used the total country data in the tool itself

This method gives us a reasonable estimate of inflation in Japan from 1950 until the present.

Implications

If you've been a long time reader (thank you), we don't need to explain why dividends are important - they make a huge difference over longer time periods such as a 'typical' 40 year career.

Please let us know if you see any bugs or issues in the calculator - we'll note any issues we do find, but we expect that it's in reasonable shape for today.