Annual Return

Annual return is simply what you get back from your investment each year. It's the whole enchilada of what your investment makes you (or costs you), including capital gains or losses and interest or dividends.

You owned Smooshem Ketchup Company last year on January 1. The stock traded at $50 a share. By the next New Year's Eve, the stock was trading for $55. But it also paid $2 in dividends through the year. Its annual return, in simple terms (i.e., not worrying about the time value of dividends paid at different times of the year) was $7 total from a base of $50 or 7 / 50 = 14%.