Total return is calculated based on dividends and capital gains in stock investments.
False. The total return of a company can be calculated based on both dividends and capital gains, not just dividends alone. Total return includes dividends and capital gains, which are the profits shareholders earn from increases in the stock's value.
For instance, in the stock market, the total return from investing in the S&P 500 index includes dividends paid by companies within the index and capital gains from the stocks' price appreciation over time.
In summary, the total return on an investment accounts for both dividends and capital gains earned by shareholders, providing a comprehensive measure of the overall profitability of investing in a company's stock.
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