Quick answer
Stock CAGR is the constant yearly rate that turns your initial investment in a stock into its final value over the holding period: (Final value ÷ Initial investment)^(1 ÷ Years) − 1. It is the same formula as any CAGR; include dividends to measure total return.
- Formula
- (Final ÷ Initial)^(1 ÷ Years) − 1
- Example
- $4,000 → $9,500 in 6 years = 15.51% a year (+137.5% total)
- With $300 dividends
- 16.11% a year (+145% total)
- Not the same as
- Any single year’s return — CAGR is smoothed between two dates
- Use instead when
- You bought or sold in several lots → XIRR
Last updated
What is stock CAGR?
Stock CAGR is the compound annual growth rate of a stock position: the single yearly rate that would have turned your initial investment into its final value over the time you held it. It is the same CAGR used for any asset — the stock only supplies the inputs. Fund fact sheets, broker statements and company reports use it because it puts holdings of different sizes and holding periods on one comparable yearly scale.
How stock CAGR is calculated
CAGR = (Final value ÷ Initial investment)^(1 ÷ Years held) − 1For stocks, three inputs decide whether the answer is meaningful:
- Final value. Use the market value of the whole position on the end date — shares × price — not just the price change.
- Dividends. A price-only CAGR ignores the cash a company paid you. Add dividends you received in the optional field, or use a value that already includes reinvested dividends, to get the total-return CAGR.
- Exact dates. Trades happen on specific days. The calculator counts the days between your buy and sell dates, so a 5-year-and-4-month hold isn’t rounded to 5 years.
Example: calculating the CAGR of a stock
You buy 50 shares at $80 — a $4,000 investment. Six years later the shares are worth $9,500, and you have also received$300 in dividends along the way.
- Price-only: (9,500 ÷ 4,000)^(1/6) − 1 = 15.51% a year.
- With dividends: (9,800 ÷ 4,000)^(1/6) − 1 = 16.11% a year.
- Total return: +137.5% on price alone, +145% including dividends.
The dividends added about 0.6 percentage points a year — small in one year, meaningful when compounded over a decade.
Why CAGR is useful for comparing stocks
Suppose one stock gained 80% over six years and another gained 60% over three. The 80% looks better, but the CAGRs are 10.29% and 16.96% a year — the second grew much faster. CAGR also lets you compare a stock with an index fund, a bond yield or your own target return. To line up several holdings side by side, use the Compare tab in the CAGR calculator.
CAGR vs total return
Total return answers “how much did I make?” — $4,000 to $9,500 is +137.5%. CAGR answers “how fast did it grow per year?” — 15.51%. Total return grows with time held, so it can’t compare holdings of different lengths; CAGR can. Report both: total return for the result, CAGR for the pace.
CAGR vs annual returns
Annual returns are what the stock actually did each calendar year. CAGR is a smoothed rate between two dates and is not the return of any particular year. A stock that returned +40%, −20% and +25% over three years ended 40% higher — a CAGR of 11.87%, although no single year was anywhere near 11.87% and the simple average of the three is 15%. To see real year-by-year returns, enter one price per year in the calculator’s Yearly data tab.
Limitations of CAGR for stocks
- It hides the ride. Two stocks with the same CAGR can have very different drawdowns along the way.
- It depends on the endpoints. Starting just after a crash or ending at a peak can flatter the result; compare the same dates where possible.
- It assumes one lump sum. Regular purchases or partial sales need XIRR instead.
- Splits and corporate actions. Use split-adjusted prices, or the value of your whole position, so a stock split doesn’t look like a crash.
- It looks backwards. A strong historical CAGR says nothing certain about future returns.
Related tools
To project where a stock position could go at an assumed growth rate, use the reverse CAGR calculator. To track holdings in a spreadsheet, theCAGR in Excel guide has ready-made formulas. A single stock’s CAGR tells you how that holding did; your overall return depends on your mix of stocks, bonds and cash. To check whether gains beat inflation, enter the inflation rate for your years in the calculator. More questions are answered on the CAGR FAQ.
Sources and further reading
- Microsoft Support: RRI function — Excel’s built-in equivalent of the CAGR formula
- Investor.gov (U.S. SEC): Stocks — how stock returns come from price changes and dividends
- Investor.gov: Compound interest calculator — compounding explained by the SEC
- Wikipedia: Compound annual growth rate
Educational information only — not investment advice. Past performance does not guarantee future results.
Stock CAGR questions
How do I calculate the CAGR of a stock?
Divide the value of your position at the end by what you paid, raise the result to the power of 1 ÷ years held, and subtract 1. Shares bought for $4,000 and worth $9,500 six years later: (9,500 ÷ 4,000)^(1/6) − 1 = 15.51% a year.
Should dividends be included in stock CAGR?
Include them if you want the total return. Enter cash dividends you received in the optional dividends field, or use a value that already includes reinvested dividends. Leaving them out gives the price-only CAGR, which understates the return of dividend-paying stocks.
Is stock CAGR the same as the annual return?
No. CAGR is one smoothed rate between two dates. A stock that returned +40%, −20% and +25% over three years has a CAGR of 11.87%, even though no single year returned 11.87%. Use the Yearly data tab to see actual yearly returns.
Can I use CAGR if I bought shares at different times?
Not for the whole position. CAGR assumes one purchase at the start. Calculate each purchase separately, or use XIRR, which accounts for the date and size of every buy and sale.