Capital Gains Yield — Smart Financial Analysis
NVIDIA stock had a capital gains yield of 239% in 2023. Meanwhile, AT&T's dividend yield was 7% but capital gains yield was -15%. Which mattered more? Let's calculate.
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CGY = (Current Price - Purchase Price) / Purchase Price × 100%. CGY measures price appreciation only. Total return = CGY + Dividend Yield. Negative CGY means the asset lost value.
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Why: Capital gains yield (CGY) measures pure price appreciation or depreciation as a percentage: (Current Price - Purchase Price) / Purchase Price. It excludes dividends. Total retur...
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💡 Money Facts
Capital Gains Yield analysis is used by millions of people worldwide to make better financial decisions.
— Industry Data
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— NBER Research
The average American makes 35,000 financial decisions per year—many can be optimized with calculators.
— Cornell University
Globally, only 33% of adults are financially literate, making tools like this essential.
— S&P Global
Capital Gains Yield (CGY) = (Current Price - Purchase Price) / Purchase Price. It measures price appreciation (or depreciation) as a percentage. Total Return = CGY + Dividend Yield. Apple stock from $150 to $185 = 23.3% CGY. The S&P 500 total return is ~10% annually: ~7% from CGY and ~3% from dividends. Growth stocks have high CGY but low/no dividends. Value/income stocks have low CGY but high dividends. In a bear market, CGY is negative — dividends provide a cushion. Capital gains are taxed differently than dividends in most countries.
Sources: S&P Global, Morningstar, Damodaran NYU, IRS.
Key Takeaways
- • CGY = (Current Price - Purchase Price) / Purchase Price × 100%
- • Total return = CGY + Dividend Yield — both matter for complete picture
- • Growth stocks: high CGY, low dividends. Income stocks: low CGY, high dividends
- • Unrealized CGY is tax-free until you sell — the "buy and hold" advantage
Did You Know?
- • S&P 500 total return ~10%/year: ~7% CGY + ~3% dividends (S&P Global)
- • NVIDIA had 239% CGY in 2023 with minimal dividends (Morningstar)
- • AT&T had 7% dividend yield but -15% CGY — dividends cushioned the loss
- • Capital gains are taxed at 0%, 15%, or 20% (long-term) vs ordinary income rates (IRS)
- • Real estate: CGY + rental yield = total return (Damodaran NYU)
How It Works
The Formula
CGY = (P1 - P0) / P0 × 100%. Simple but powerful — measures pure price movement.
CGY vs Total Return
Total return includes dividends. S&P price-only return ~7%; total return with dividends reinvested ~10%.
Growth vs Income Stocks
Growth: high CGY, low dividends (Amazon, Tesla). Income: low CGY, high dividends (utilities, REITs). Tax implications differ.
Expert Tips
CGY by Asset Class
| Asset | 10yr Avg CGY | Dividend/Income | Total Return |
|---|---|---|---|
| S&P 500 | ~7% | ~3% | ~10% |
| Real Estate | ~3.8% | ~3-5% | ~7-9% |
| Bonds | ~1-2% | ~2-4% | ~3-5% |
| Tech | ~15% | ~0.5% | ~15.5% |
| Utilities | ~2% | ~4% | ~6% |
Frequently Asked Questions
What is capital gains yield?
Capital gains yield (CGY) measures pure price appreciation or depreciation as a percentage: (Current Price - Purchase Price) / Purchase Price. It excludes dividends. Total return = CGY + Dividend Yield. Apple stock from $150 to $185 has 23.3% CGY. Growth stocks typically have high CGY and low dividends; value stocks the opposite.
What is the CGY formula?
CGY = (Current Price - Purchase Price) / Purchase Price × 100%. Example: Buy at $150, sell at $185 → CGY = ($185 - $150) / $150 = 23.3%. For annualized CGY over multiple years: [(1 + CGY/100)^(1/years) - 1] × 100%.
CGY vs dividend yield: what's the difference?
CGY measures price appreciation only. Dividend yield measures income from dividends. Total return = CGY + Dividend Yield. NVIDIA had 239% CGY in 2023 with minimal dividends; AT&T had 7% dividend yield but -15% CGY. Growth stocks favor CGY; income stocks favor dividends.
CGY vs total return: how do they relate?
Total return = CGY + Dividend Yield. The S&P 500 total return is ~10% annually: ~7% from CGY and ~3% from dividends. A stock with 10% CGY and 3% dividend yield has 13% total return. Always consider both for complete picture.
What does negative capital gains yield mean?
Negative CGY means the asset lost value. $100 → $80 = -20% CGY. In a bear market, CGY is negative — dividends provide a cushion. Example: $50 → $35 = -30% CGY; with 2% dividends, total return is -28%. Capital losses can offset gains for tax purposes.
How is CGY used for stocks and bonds?
For stocks: CGY + dividend yield = total return. For bonds: CGY (price change) + coupon yield = total return. Bond bought at $950, now $980: CGY = 3.16%. Add 4% coupon = 7.16% total. Real estate: CGY + rental yield = total return.
Key Formulas
CGY = (Current Price - Purchase Price) / Purchase Price × 100%
Pure price appreciation as a percentage.
Total Return = CGY + Dividend Yield
Complete picture of investment performance.
Sources
- • S&P Global — S&P 500 historical returns and CGY data
- • Morningstar — stock and fund performance, dividend yields
- • Damodaran NYU — equity risk premiums, asset class returns
- • IRS — capital gains tax rates and treatment
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