Term · Valuation
TSR (Total Shareholder Return)
In briefTotal Shareholder Return (TSR) measures the total return of a stock investment over a period from price change and reinvested dividends. It shows what a shareholder would have earned in total, but is purely backward-looking and not a forecast measure.
Definition
Total Shareholder Return (TSR) measures the total return of a stock investment over a period from price change and dividends. It expresses what a shareholder would have earned in total if distributions are reinvested. TSR is frequently used as a compensation and comparison metric.
How it is calculated
Formula. TSR = (Price change + reinvested dividends) ÷ Initial price × 100 %
Why it matters for small caps
For small stocks with volatile prices, TSR shows the actual total return including distributions and makes it comparable across periods. As a backward-looking metric, however, it says nothing about future developments.
Common misreadings
- A high historical TSR is read as an indicator of future returns, even though it exclusively reflects past price and dividend performance.
In the process
Frequently asked
What goes into TSR?
The price change of the stock and the dividends paid in the period, usually assuming they are reinvested.
What is TSR used for?
As a comparison metric between stocks and frequently as a measure in the variable compensation of executives.
Does a high TSR say anything about the future?
No. TSR is purely backward-looking and permits no reliable statement about future returns.
Related terms
Education only, not investment advice. Ranges and thresholds are didactic orientation values, not an official standard.