The total return on a stock consists of which two components?

The total return on a stock is comprised of two primary components: the dividend yield and the capital gain yield.

The dividend yield represents the income generated from dividends paid out by the stock expressed as a percentage of the stock's price. This component reflects the cash flow that investors receive from holding the stock, which can be an important consideration for those seeking income from their investments.

On the other hand, the capital gain yield refers to the increase in the stock’s price over time. This component measures the appreciation of the stock's value and indicates how much an investor stands to gain from selling the stock at a higher price than what was paid for it.

Together, these two components give investors a comprehensive view of the return they can expect from owning a stock, factoring in both income through dividends and the potential for growth in the stock's price. Understanding these elements is crucial for evaluating the overall performance of a stock as an investment.