SPY versus SPLV and RSP

[SoyUnGanador]

I am confused. Yes, finance.yahoo.com adjusted Closing stocks prices take into account dividends and splits, but how do you factor into the Returns calculations that the stock/ETF has paid out a dividend? Do you also download a dividend history and add that back in to the calculations?

(adjusted close day two minus adjusted close day one) / adjusted close day one

is % gain for day two. Everything (I think!) is already built into the adjusted closes so no need to add anything back, etc.

I would love to learn I'm wrong, then there might actually be something that can beat the QQQs!

 

[ph1l]

I am confused. Yes, finance.yahoo.com adjusted Closing stocks prices take into account dividends and splits, but how do you factor into the Returns calculations that the stock/ETF has paid out a dividend? Do you also download a dividend history and add that back in to the calculations?

The adjusted prices assume you reinvested dividends.

For example, according to Yahoo Finance, SPLV has close price for 20110505 and 20230217 == 24.79 and 63.47. The compound annual growth rate without dividends is 8.30%.

The corresponding adjusted close prices are 18.814640 and 63.47. The compound annual growth rate assuming dividends are reinvested is 10.86%.

 

[SoyUnGanador]

Look at JEPI, here:

https://finance.yahoo.com/quote/JEP...istory&frequency=1d&includeAdjustedClose=true

On 2/1 it paid a dividend of .444. Its closing price on 1/31 was 55.47. On 2/1 it was 55.04. So it was clearly dropped by amount of dividend. But its adjusted price 1/31 was 55.03 (adjusted to reflect the dividend) and on 2/1 it was 55.04 (same as closing price, since been no adjustments since).

So it essentially adds the dividend back as a subtraction to prior stock price, increasing gain (or decreasing loss) on the day.

 

[SoyUnGanador]

The adjusted prices assume you reinvested dividends.

For example, according to Yahoo Finance, SPLV has close price for 20110505 and 20230217 == 24.79 and 63.47. The compound annual growth rate without dividends is 8.30%.

The corresponding adjusted close prices are 18.814640 and 63.47. The compound annual growth rate assuming dividends are reinvested is 10.86%.

Assuming reinvesting dividends in the underlying security makes the most sense to me when comparing two or more securities to see which might be preferred over the others.

 

[DaveV]

Okay @SoyUnGanador and @ph1l, I get it now. All previous Adjusted Close Prices are adjusted downwards so that it appears as if the stock price has increased by the amount of the dividend on the ex-dividend date. Clever.

 

[SoyUnGanador]

Okay @SoyUnGanador and @ph1l, I get it now. All previous Adjusted Close Prices are adjusted downwards so that it appears as if the stock price has increased by the amount of the dividend on the ex-dividend date. Clever.

Indeed, I was worried just like you were when I started doing the calculations about the easiest way to build in the dividends and what not. Before someone told me it was already done for me! Makes truly comparing two or more securities, including ones that pay dividends and ones that do not, easy peasy.