No. of Recommendations: 7
My dear METAR minds is there a simple formula to calculate my average percent of return across my portfolio? I look at my holdings and estimate my average dividend return to be around 5.5 percent, but of course each holding has a different weighting and different payout percentage then the next and I think I could easily be off by a half percent or more. Thanks bcTim.

Two ways come to mind: Easiest & not too tough

Easiest would be if all of your holdings were in dividend paying companies: Add up all the interest paid for the year then divide it by the total cost of buying those companies....multiply the answer by 100 to get the percentage yield.

Not too tough has a little more to it but, with calculators is still not that hard. Add up your portfolio (even those that don't pay a dividend) that number becomes the denominator (divisor) in each of the following equations. Then take the amount invested in one entity, divide it by the total and then multiply that answer by the interest rate expressed as a decimal. To put it mathematically: Interest rate X (investment in company/total investments) = weighted interest rate.

Numerical example: Assume $25,000 invested in company A which pays 3.5% dividend and $32,000 invested in company B which pays 5% dividend.

The total invested is $57,000 (gotten by adding $25,000 +32,000)
3.5% and 5% would be converted to the decimals .035 & .05
Now the math:
.035 X (25,000/57,000) = .015
.05 X (32,000/57,000) = .028
.015 + .028 = .043 = 4.3% which is your dividend rate for the 2 company portfolio.

Do this for each holding and then add all the weighted returns together to derive the weighted rate for your portfolio.

Microsoft Excel, if you have it, makes this job easy but plain old pen and paper is not really that much tougher.

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