Finance Dictionary
Yield
Definition
The income return on an investment, such as the interest or dividends received from holding a particular security.
Deep Dive
Yield refers to the income return on an investment, expressed as a percentage of its current price or face value. It represents the actual income generated by an asset, such as the interest paid on a bond, dividends received from a stock, or rental income from real estate, rather than capital gains from price appreciation. Investors focused on generating regular income from their portfolios closely monitor yield metrics to gauge the effectiveness and stability of their income stream.
Examples & Use Cases
- 1A blue-chip stock paying an annual dividend of $2 per share and trading at $50, resulting in a 4% dividend yield
- 2A 10-year U.S. Treasury bond offering a 3% yield to maturity
- 3A rental property generating $24,000 in annual rent with a purchase price of $400,000, yielding 6%.
Related Terms
DividendInterest RateReturn on Investment (ROI)