What does total shareholder return indicate about a company?

Total shareholder return (TSR) is a critical metric that measures the total value that shareholders receive from their investment in a company over a specific period. It encompasses not only the increase in the share price but also includes any dividends paid to shareholders. By looking at TSR, investors can understand the comprehensive gains or losses from their investment, reflecting both capital appreciation and income from dividends.

This measurement is particularly important for assessing how effectively a company creates value for its shareholders compared to other investment opportunities. A higher TSR indicates a better performance in terms of delivering financial returns to shareholders, encompassing both equity growth and dividend income. This makes it an essential tool for investors when evaluating the overall financial health and attractiveness of a company.