Total Return
The real return that adds the dividends and distributions received while you held a position to the price change, not just the price move; comparing adjusted closes captures it automatically.
Formula
Total Return = (ending price − beginning price + dividends) / beginning price or via adjusted close: return_pct = (adj_close_end / adj_close_start) − 1
When people figure out what a stock or ETF earned them, they usually think only of the gap between the buy price and the sell price. That's only half the story. Any dividends or distributions paid out while you held the position are also money in your pocket, and total return is the number that folds both pieces, the price move and the payouts, into a single figure.
Leave dividends out and a stock's performance looks worse than it really was. For a REIT or a dividend payer yielding 3–4% a year, the gap between price-only return and total return widens with every passing year, and it grows faster still if you assume the dividends were reinvested and left to compound. That's why long-run comparisons and benchmarks like the S&P 500 are almost always quoted on a total-return basis.
The trick that saves you from adding dividends back by hand is the adjusted close (adj_close). Every time a dividend or a split hits, the historical prices are retroactively adjusted, so comparing one adjusted close to another bakes the dividends straight into the return. Use the raw close instead and every ex-dividend date looks like a sudden price drop, understating what you actually earned.
In the end, judging with real data whether a call or an investment thesis actually paid off means looking at the true return, dividends included, not just the visible price. That's exactly why anyone checking performance against real data insists on a total-return basis.
Example
A stock bought at $100 rises to $105 and pays $3 in dividends along the way. The price-only return is +5%, but the total return is (105 − 100 + 3) / 100 = +8%.
How LDBD uses it
LDBD scores predictions on the adjusted close, not the raw close, so the return_pct that decides whether a directional call was right already includes dividends — it's a total return. That keeps an ex-dividend price drop from unfairly rewarding a 'down' call or punishing an 'up' one. The same return_pct feeds both the headline metric's directional log return (g) and the legacy Total Score.
FAQ
How different are total return and price return?
For a stock that pays no dividend, they're identical. But for something yielding 3–4% a year, total return already runs that much ahead after a single year, and the gap compounds noticeably over several.
Is it still total return if I don't reinvest the dividends?
Yes — cash dividends you pocket are still part of your return whether you reinvest or not. Just note that the widely quoted 'total return index' assumes immediate reinvestment, so if you didn't reinvest, your real result trails the index by that compounding.