How to Figure Percentages on Growth Stocks

by Mark Kennan

The percentage increase is one way to measure how well a stock performs, either to calculate your own gains or to decide if the stock is one in which you want to invest. In order to calculate a growth rate that you can use to compare stocks that you held for different time frames, you need to figure the compound average annual growth rate. However, you also need to account for the dividends paid to make sure you do not discount the returns generated by stocks paying larger dividends.

Add any dividends earned during the specified time period to the ending value of the stock. For example, if the stock value went up from $55 to $61 and paid $1.60 in dividends during that time, add $1.60 to $61 to get $62.60.

Subtract the ending value adjusted for dividends by the beginning value of the stock. In this example, divide $62.60 by $55 to get 1.13818.

Divide 1 by the time in years over which the stock grew. In this example, if the stock grew over 2 years, divide 1 by 2 to get 0.5.

Calculate the Step 2 result raised to the power of the Step 3 result using a scientific calculator. In this example, enter 1.13818, push the exponent key, enter 0.5 and push enter to get 1.06686.

Subtract 1 and multiply the remainder by 100 to calculate the percentage annual growth on the stock. In this example, subtract 1 from 1.06686 to get 0.06686, then multiply by 100 to find the mean annual percentage growth equals about 6.69 percent.

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