What Is the Holding Period Return/Yield?

The dollar return on a single financial asset held for a specific time, or holding period, is given by the following:

Dollar return = Income received + Price change

We can call this a holding period dollar return as there is no time frame placed on the calculation. It can reflect dollar returns earned over two months or two years—or shorter or longer. 

The term “holding period” can refer to virtually any time frame. It can reflect the entire time period for which an investor has owned an asset or a smaller time frame.

Suppose Amy held a share of stock, and she received dividends of $2 while the stock price rose from a purchase price of $25 to its current level of $30. Should Amy sell the stock today, her dollar return would be the following:

Dollar return = Income received + price change 

                         = $2 + ($30 − $25)

                   $7 = $2 + $5

She received $2 in dividends and the value of her investment rose by $5 for a total dollar return of $7. To compare this investment return with others, it is best to measure the dollar return relative to the initial price paid for the stock. This holding period return, or HPR, is the dollar return divided by the initial price of the stock:

Holding period return (HPR) = Dollar return/Initial price

Amy’s holding period return was:

HPR = (Dollar return/Initial price) = ($7/$25) = 0.28 or 28 percent

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