Holding Period Return Excel Template

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Let us take the example of Stefan who had invested $5,000 three years back in some of the
real estate stocks that have generated annual dividends of $250 in Year 1, $300 in Year 2
and $400 in Year 3. Currently, the stocks are valued at $5,500. Calculate the holding
period return of the investment for Stefan based on the given information.

Initial Value $5,000

Ending Value $5,500
Dividend in Year 1 $250
Dividend in Year 2 $300
Dividend in Year 3 $400

Total Income generated by the real estate stocks can be calculated as,
Income Generated = Dividend in Year 1 + Dividend in Year 2 + Dividend in Year 3

Income Generated $950

Holding Period Return is calculated using the formula given below

Holding Period Return = [Income Generated + (Ending Value – Initial Value)] / Initial Value

Holding Period Return 29%

Let us take the example of two investment portfolios. Both the portfolio have similar
risk level but differ in terms of income generation, investment value and investment
horizon. Determine which portfolio has performed better in terms of overall holding
period return andannualized holding period return based on the following information:

Particulars Portfolio X Portfolio Y

Initial Value $5,000 $6,500
Ending Value $5,700 $6,900
Dividend in Year 1 $500 $700
Dividend in Year 2 $600 $650
Dividend in Year 3 $550 $750
Dividend in Year 4 $550
Dividend in Year 5 $650
Investment Tenure (Years) 3 5

Total Income generated by the Portfolios can be calculated as:

Income Generated = Dividend in Year 1 + Dividend in Year 2 + …+ Dividend in Year n

Portfolio X Portfolio Y
Income Generated $1,650 $3,300

Holding Period Return is calculated using the formula given below

Holding Period Return = [Income Generated + (Ending Value – Initial Value)] / Initial Value

Portfolio X Portfolio Y
Holding Period Return 47% 56.92%

Annualized Holding Period Return is calculated using the formula given below
Annualized Holding Period Return = [(Holding Period Return + 1) 1/n – 1]

Portfolio X Portfolio Y
Annualized Holding Period 13.70% 9.43%
Return