📈 Finance guide

How to Calculate Capital Gains Yield

Capital gains yield (CGY) measures the percentage return that comes purely from price appreciation — excluding dividends, interest, or any other income. This guide covers the CGY formula, a full step-by-step walkthrough, six worked examples across different scenarios, a gain vs loss waterfall, CGY vs total return comparison, and common calculation mistakes.

Last updated: March 28, 2026

What is capital gains yield?

Capital gains yield is the percentage change in an asset's market price from the start of a holding period to the end. It answers one focused question: how much of the return came from price movement alone?

CGY is distinct from income yield, which measures cash distributions like dividends or interest. The two components together make up total return — but CGY isolates the appreciation or depreciation side.

Price-only metric
Capital Gains Yield

Measures percentage change in market value from beginning price to ending price. Excludes dividends, interest, and any other cash income. Can be positive (appreciation) or negative (depreciation).

Income metric
Dividend / Income Yield

Measures cash distributions received relative to the beginning price. Combined with CGY, it forms total return. An asset with no income has a dividend yield of 0% — CGY and total return are equal.

Investors use CGY to compare price performance across assets with different income policies, to build performance attribution reports, and to understand how much of a gain came from market appreciation versus income generation.

Capital gains yield formula

The standard formula is:

CGY = (Ending Price − Beginning Price) ÷ Beginning Price × 100
Ending Price = asset price at the end of the measurement period
Beginning Price = asset price at the start of the period
Result in % = multiply the decimal result by 100

The numerator — ending price minus beginning price — gives the absolute dollar gain or loss. Dividing by the beginning price converts that to a relative return. Multiplying by 100 expresses it as a percentage.

Quick example

A stock starts at $50 and ends at $60:

Beginning price $50.00
Ending price $60.00
Price gain (② − ①) $10.00
= Capital gains yield ($10 ÷ $50 × 100) 20.00%

What if the price fell?

A negative ending price produces a negative result — the investment generated a capital loss. The formula works identically; the sign of the gain determines whether CGY is positive or negative.

Beginning price $120.00
Ending price (declined) $108.00
Price loss (② − ①) −$12.00
= Capital gains yield (−$12 ÷ $120 × 100) −10.00%

How to calculate capital gains yield — step by step

1
Identify the beginning price. This is the asset's market price at the start of the period you are measuring — typically the purchase price or the opening price on a specific date. Make sure it reflects the actual market value, not book value.
2
Identify the ending price. This is the market price at the end of the period — either the current price, the sale price, or the closing price on a target date. Use prices from the same source or exchange for consistency.
3
Subtract beginning price from ending price. This gives the absolute dollar gain or loss. Example: $92 − $80 = $12. A positive number means appreciation; a negative number means depreciation.
4
Divide the result by the beginning price. This converts the dollar change into a relative return. Example: $12 ÷ $80 = 0.15. The beginning price is always the denominator — not the ending price.
5
Multiply by 100 to convert to a percentage. Example: 0.15 × 100 = 15%. If you leave the result as a decimal (0.15), remember that 0.15 means 15%, not 0.15%. This is one of the most common mistakes in manual calculations.
6
Check the sign of the result. A positive CGY means the asset appreciated in price. A negative CGY means the asset lost value. If your price went up but your CGY is negative, recheck that you divided by the beginning price, not the ending price.

Worked examples

Six scenarios across different asset types and outcomes — gains, losses, flat performance, and a case with income for total return comparison.

Example 1 · Stock gain

Simple price appreciation

A stock rises from $40 to $50 over one year.

Gain = $50 − $40 = $10
CGY = $10 ÷ $40 × 100 = 25.00%

✓ 25% return purely from price appreciation.

Example 2 · Capital loss

Price depreciation

A stock falls from $120 to $108 over nine months.

Loss = $108 − $120 = −$12
CGY = −$12 ÷ $120 × 100 = −10.00%

✕ −10% capital loss — asset declined in value.

Example 3 · ETF

ETF appreciation

An ETF moves from $75 to $84 over the year.

Gain = $84 − $75 = $9
CGY = $9 ÷ $75 × 100 = 12.00%

✓ 12% CGY from market price movement.

Example 4 · Flat performance

No price change

A stock starts and ends the year at $65.

Gain = $65 − $65 = $0
CGY = $0 ÷ $65 × 100 = 0.00%

→ Zero capital gains yield — no price appreciation or depreciation.

Example 5 · Partial recovery

Recovery from a dip

An investment goes from $90 to $99 after a prior decline.

Gain = $99 − $90 = $9
CGY = $9 ÷ $90 × 100 = 10.00%

✓ 10% CGY from partial price recovery.

Example 6 · With income

CGY vs total return

Asset from $10,000 to $11,250 + $300 dividend income.

CGY = $1,250 ÷ $10,000 × 100 = 12.50%
Total = ($1,250+$300) ÷ $10,000 × 100 = 15.50%

→ CGY = 12.50%, Total Return = 15.50% — income adds 3%.

CGY vs total return — understanding the difference

Capital gains yield and total return are closely related but they measure different things. Knowing which one to use prevents misattribution of investment performance.

Component What it includes Example
Capital gains yield Price change only — appreciation or depreciation. Excludes dividends, interest, and distributions. 12.50%
Income yield Cash payments received (dividends, interest, distributions) divided by beginning price. 3.00%
Total return CGY + income yield. Full picture of performance over the holding period. 15.50%

The example above uses an asset that went from $10,000 to $11,250 (CGY = 12.50%) and also paid $300 in dividends (income yield = 3.00%), producing a total return of 15.50%.

When to use CGY
Price-only comparison

Use CGY when comparing assets purely on price performance — for example, a growth stock versus an index fund where dividend policy differences would skew total return. CGY isolates the market appreciation component.

When to use total return
Full performance view

Use total return when income matters — for example, comparing a high-dividend stock against a growth stock, or evaluating a bond fund where interest is a significant portion of return. CGY alone would understate performance.

How to interpret the result

Once you have the CGY figure, the interpretation depends on sign, magnitude, and context.

Positive CGY — the asset appreciated in price. A CGY of 12.50% means the market price grew by 12.50% relative to the purchase price. The higher the CGY, the stronger the price appreciation over the period.
Negative CGY — the asset declined in price. A CGY of −10% means the market price fell by 10% relative to the starting value. This is a capital loss. A negative CGY does not automatically mean a negative total return if income was high enough to offset the loss.

A CGY of 0% means the price was unchanged — no appreciation or depreciation. This can still produce a positive total return if income was received.

CGY does not tell you whether the result was good or bad in absolute terms — that depends on the holding period, the benchmark, and the investor's objective. A 5% CGY over 3 months is very different from 5% over 10 years.

Common mistakes to avoid

  • Dividing by the ending price instead of the beginning price. The formula always uses the beginning price as the denominator. Using the ending price produces a different metric — it's a common error that makes CGY appear smaller than it is.
  • Forgetting to convert the decimal to a percentage. A result of 0.18 means 18%, not 0.18%. If you skip the × 100 step, the number looks 100 times smaller than it should be.
  • Including dividends in the ending price. If the asset paid dividends during the period, those payments should go into income yield — not be added to the ending price. Mixing them overstates CGY.
  • Using inconsistent price sources. Make sure beginning and ending prices come from the same source — closing price, adjusted close, or bid/ask midpoint. Mixing sources introduces noise into the result.
  • Comparing CGY across different holding periods without noting the time frame. A 15% CGY over 6 months is very different from 15% over 5 years. CGY is not annualized by default — always specify the period.
  • Treating CGY as total return for income-generating assets. For stocks that pay dividends or bonds that pay coupons, CGY understates actual performance. Always add income yield if a full return comparison is the goal.

FAQ

What is capital gains yield?

Capital gains yield is the percentage change in an asset's market price over a measurement period. It is calculated as (Ending Price − Beginning Price) ÷ Beginning Price × 100. It measures price appreciation or depreciation only and excludes income such as dividends or interest.

How do you calculate capital gains yield?

Subtract the beginning price from the ending price to get the dollar gain or loss. Divide that by the beginning price. Multiply by 100 to convert to a percentage. Example: a stock from $80 to $92 → ($92 − $80) ÷ $80 × 100 = 15%.

Can capital gains yield be negative?

Yes. If the ending price is lower than the beginning price, the gain is negative and CGY is negative — indicating a capital loss over the period.

Is capital gains yield the same as total return?

No. Total return includes both price change (CGY) and income received during the period (dividends, interest, distributions). If no income was received, CGY equals total return. If income was received, total return will be higher than CGY.

Does capital gains yield account for taxes?

No. CGY is a pre-tax metric. After-tax return depends on whether the gain is short-term or long-term, the investor's applicable tax rate, any offsetting losses, and jurisdiction-specific rules. Consult a tax advisor for after-tax calculations.

Is CGY the same as annualized return?

No. CGY as calculated here is a holding-period return — it covers whatever time span the beginning and ending prices represent. It is not automatically annualized. To compare investments held for different lengths of time, convert to an annualized return separately.