Inside the S&P 500: Dividends Reinvested

Slightly more than 400 of the 500 companies included in the S&P 500 pay dividends.  At the current rate, these dividends will be a bit over 2% of the value of the index.  In a strong market like the one enjoyed in the last 12 months when the index price rose over 20%, an extra 2% may not seem like a lot.  In a declining market where every little bit counts, the 2% is very welcome.  However, the impact can be a lot more than just two percent over time.

S&P Dow Jones Indices calculates a total return index for the S&P 500 that includes the impact of investing dividends back into the index itself.   In the calculation, dividends are invested in the entire index, not just in the stock that paid the dividend.  The invested dividends then grow (or fall) as the overall index grows (or falls), rather than tracking the stocks that paid the dividends. This index-wide reinvestment approach is typical in most indices.

The cumulative impact over time can be substantial: the chart shows the S&P 500 price index in red and the S&P 500 total return index in blue. The two data series are calculated to start in January 1988 at the same level.   One thousand dollars invested in the S&P 500 at the end of January, 1988 would have been worth $5557 at the end of July, 2013. However, if the dividends were reinvested in the index, the investment would be worth $10,635 by the end of July.  Reinvesting the dividends roughly doubled the value of the investment.  Looking at the same time period, the annual return earned by the total return index was 9.71% and by the price index was 6.96%, a spread of 2.75%.


The posts on this blog are opinions, not advice. Please read our disclaimers.

20 thoughts on “Inside the S&P 500: Dividends Reinvested

  1. Bob Wolff

    when the financial institutions are reporting growth in the Standard and Poor 500 index, which ones are they rreferencing the price index for the return index

    1. David BlitzerDavid Blitzer Post author

      Most of the references are to the price index, the one place where total return is often used is comparing mutual fund returns to index returms. The price index closed at 1791.54 on November 18th. Year to date to November 18th, the price index is up 25.62% and the total return is up 27.99%.

  2. Pingback: Inside the S&P 500: Multiple Share Classes and Voting | S&P Dow Jones Indices

  3. Nam VU

    Hi Mr. Blitzer,
    I am doing a research on Total Return Index of S&P 500 at the moment. But beside the methodology of the TR index, so far I have not been able to find much information. I just wondering if you could answer me couple questions:
    – Which financial websites such as Google finance, Y! Finance, Bloomberg, Reuters, etc. can I track the real-time data of S&P 500 TR. If so, what is its code?
    – How often it is calculated intra-day? I know S&P 500 is re-calculated every 15 second. Does S&P 500 (TR) recalculated every 15 seconds when the S&P 500 Price Index changes? If you can, could you give me the source of that information, that would be great.
    – What kinds of dividends goes into the Total Return Index? Would it only cash dividends or also special dividends as well?
    If you don’t mind, could you show me some sources that go in depth about Total Return Index (books, articles, webpages, etc.)?

    1. David BlitzerDavid Blitzer Post author

      You can find the total return series on our web site,, the ticker is S&P 500 (TR). You can also find it on Bloomberg’s professional service as SPTR. Other web sites also carry the total return series as well. Dividends are credited at the end of the trading day so real time changes during the trading day only reflect changes in the prices of the stocks in the index. Ordinary dividends are included in the total return calculation. Special dividends are treated as a return of capital and are not included in the total return series. Three references on our web site may be useful — the US Indices Methodology which covers the S&P 500, S&P MidCap 400 and S&P SmallCap 600 indices, Index Mathematics which describes various index calculations and the Corporate Actions Policies and Procedures.

      1. Barry

        Hi David, we do a lot of backtesting, and I was wondering you all have an index calculator that allows you to calculate total returns between specific dates, such as January 18 or May 7 (i.e. dates don’t fall on month-end or quarter-end). Russell has a great index calculator that gives you total returns over any dates you want. It makes things really easy. I was wondering if you all have the same thing. I can’t seem to find it on your website.

        1. David BlitzerDavid Blitzer Post author

          We publish a daily total return index for the S&P 500 and for most of our equity indices. The percentage change from one date to another gives the total return generated by the index between the two dates. On our web site, you can go to, click on the performance tab on the upper left of the chart and then click on export on the upper right. It will download an excel file showing the price index, the total return and the net total return (adjusted for withholding tax for non-US investors) with daily data.

  4. Manji Ram

    Dr Blitzer ,
    Please clarify in details,
    are most active mutual funds wrongfully & intentionally comparing their fund’s return to SP500 rather than
    S&P 500 Total Return (^SPXTR) ,to look better to investors ? To understate losses or overstate gains ?
    Should they be comparing with TR Index ^SPXTR ?

    1. David BlitzerDavid Blitzer Post author

      I did not suggest that any mutual funds were making any mistakes. The point is that a fund’s price returns should be compared to the S&P 500 price return and a fund’s total return should be compared to the S&P 500 total return.

      1. Andrew

        Good Morning David,

        Thank you for all the helpful tips. I would like to download data on the S&P 500 TR and its total return sub-indices. The new S&P website is unclear to me, hence I do not know how to access this total return information. Until 1-2 years ago, I could access and obtain the information, but now I am unsure how to do this. For instance, I would like the measures of TR for the health sector, consumer discretionary, energy, utilities, and so forth please. How would an expert like you suggest I obtain this information please.

        Kind Regards,


        1. Jaclyn Dimitriou

          To access index levels on our website, proceed to the individual index page, click on the desired time frame located above the line graph, then click on the EXPORT button on the far right along the time period row. This will prompt an excel file download that will include both the total return and price return levels.

          For the S&P 500®, visit
          A list of the individual S&P 500 GICS® Sector indices can be accessed through this page

  5. Phoebe Lee

    Dear Dr Blitzer ,
    It’s really nice of you and your team to provide such deep information about the S&P 500 total return index. It’s really helpful.
    I am doing data analysis on the S&P 500 price return and total return. What I want to do is to calculate the dividend from price return and total return. Could it be possible? If possible, How could I calculate it , then? Also, the dividend provided is daily, how can I translate it into yearly?
    It will be so great if I could hear from you soon.
    Thanks a lot !

    1. David BlitzerDavid Blitzer Post author

      There are two reasons why the total return index has larger returns than the price index. First, it includes dividends credited each day. Second, when these dividends are invested in the overall index, they increase as the price index rises. If one looks back over several years, most of the difference between the cumulative gains in the price index and the total return index is the growth of reinvested dividends.
      To extract the index dividend from the price index return and the total return index, first calculate the daily percentage in each index, and then take the difference between the daily total return and daily price return. This is the daily dividend index as a percentage of the price index level. To estimate the dividends paid over a period of time, multiply each daily dividend by the price index the day it was paid to get the dividends measured as points of the price index. Adding these together gives the dividends paid over the time period measured as index points. If you divide by the price index level you have the index dividend yield for that time period. For a year, simply subtracting the annual price return from the annual total return is probably a good approximation.

  6. Carl Gercke

    How would you calculate an index return, say for 5 years, that incorporates dividends received but not reinvested?

    1. David BlitzerDavid Blitzer Post author

      Assume you hold a mutual fund or an ETF which tracks an index and pays a quarterly dividend which you receive in cash and do not reinvest the dividend in the index fund. While the dividends are not reinvested, you want to include them in the return calculation. Some assumption about the dividends is necessary – a simple approach is to assume you hold the cash and do not reinvest it in any instrument or even in a bank account that pays interest.
      Return = (Gain of fund + Dividends)/(Initial Investment) where Gain = Proceeds from selling fund less initial investment.
      Numerically: Initial investment of $1000; dividends received of $100, proceeds from selling the index fund: $1500. Gain is $1500 les $100 or $500. Return is sum of $500 Gain and $100 dividends, dividend by $1000 initial investment or 60%. This is over the entire five year holding period, not an annual rate.
      If the dividends are invested in a money market fund, assume you liquidate the money market fund when the index fund is sold and treat the money market fund proceeds as the dividends.

  7. BH Jeon

    Hi, Now I’m doing some paper work about total return index.

    so i want to ask 3 questions at large.

    It would be great if you answer to my question

    Firstly, I want to know when Total Return Index was first adopted and the relevance of Total Return Index, did it meet your initial expectations and to what effect does it change your current status of satisfaction?

    Secondly, we want to know if the index if at all differs from original index is after adoption of Total Return Index and whether it is performing the role as investment index(indicator) or not?

    Lastly, we want to know how much adoption of Total Return Index affected development of derivatives market and products linked to Total Return Index like ETF, futures, or option?

    We promise that we’ll follow accordingly to the content of the questions and only answer to the purpose of our study.

    Thank you !

    1. David BlitzerDavid Blitzer Post author

      A total return index represents an investment strategy of tracking an index and reinvesting dividends paid by companies included in the index into the overall index. Dividends from a specific company are not invested in only that company. This strategy is often used by investors holding index mutual funds or ETFs. S&P Dow Jones Indices began calculating total return indices as far back as the 1930s. Initially the calculations used quarterly or monthly reinvestment schedules. The daily calculation of total return indices began in 1988 with the S&P 500.
      S&P DJI calculates both price indices where dividends are not considered and total return indices where dividends are reinvested. The performance of a total return index is always equal to or somewhat better than the performance of the corresponding price index. This is due to the mathematics of the calculation, not market movements.
      In most cases, ETFs, mutual funds, futures and options are designed to track a price index, not a total return index. In the last few years with unusually low interest rates there is increased interest in investing in dividend-paying stocks for income. One result is increased interest in indices focused on dividends and total return.

      1. BH Jeon

        Thank you very much for your quick response. and it is very helpful for me.

        I have one more question.

        What is the main role of your total return index?

        You said your S&P DJI is calculates both price index and total return index, but you also said that most of ETFs, mutual funds, futures and options designed to track a price index. So I’m curious that your total return index is really helpful for investors.

        Kind Regards,

        BH Jeon

        1. David BlitzerDavid Blitzer Post author

          Most mutual funds report their results on a total return basis. When an index is used to benchmark a mutual fund it should be a total return index.


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