2015 S&P 500 Return

Includes: SDY, SPY
by: Don't Quit Your Day Job

Although many sources will report that the S&P 500 returned -0.73% in 2015… if you include dividend reinvestment, the S&P 500 actually returned 1.19% in 2015.

Including dividends is the difference between reporting a negative return and a positive one.

Dividend Reinvested Returns Are Key!

As we point out every year, most financial publications will report a lower return on the S&P 500 than a buy and hold investor would actually experience. Most stories leave out the effect of reinvesting dividends and distributions - the act of buying more shares of a security when that security returns money to shareholders.

Logically, this doesn't make much sense - even if investors aren't reinvesting dividends, they aren't using their dividend checks to heat their homes by throwing them in a fire - making an attempt to account for dividends is a necessity. S&P Dow Jones Indices, the owner of the S&P 500, publishes an index called the "S&P 500 Total Return Index" specifically for this purpose. The S&P TR reports how investors would have performed had they immediately reinvested dividends.

We maintain two calculators which do the math for you with monthly resolution:

The S&P 500's Wild Ride in 2015

You can find some historical data on the S&P 500 and the Total Return counterpart at MarketWatch. Here's how the two indices look like on the same chart:

01/01/2015 Open 12/31/2015 Close Annual Return
S&P 500 Total Return 3776.49 3821.61 1.19%
S&P 500 Index 2058.9 2043.94 -0.73%

So, there you have it - simply choosing how to report the index's returns made a massive difference this year, literally the difference between making and losing money. Since the psychological difference of a loss with even a small gain is so great, we hope you'll agree with our assessment - you need to account for those dividend checks!

For those of your with a crystal ball or a need to answer some questions, chew these ones over:

  • Where will the S&P 500 go from here?
  • Are you a dividend reinvestor? A dividend spender? A user of dividend checks to heat your home?