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Yield

Yield

What is a 'Yield'

The yield is the income return on an investment, such as the interest or dividends received from holding a particular security. The yield is usually expressed as an annual percentage rate based on the investment's cost, current market value or face value. Yields may be considered known or anticipated depending on the security in question as certain securities may experience fluctuations in value.

Explaining 'Yield'

The yield of an investment is tied to the risk associated with the aforementioned investment. The higher the risk is considered to be, the higher the associated yield potential. Except in the most secure investments, such as zero coupon bonds, a yield is not a guarantee. Instead, the listed yield is functionally an estimate of the future performance of the investment. Generally, the risks associated with stocks are considered higher than those associated with bonds. This can lead stocks to have a higher yield potential when compared to many bonds currently on the market.

Stock Yields

In regards to a stock, there are two stock dividend yields. If you buy a stock for $30 (cost basis) and its current price and annual dividend are $33 and $1, respectively, the cost yield will be 3.3% ($1/$30) and the current yield will be 3% ($1/$33).

Bond Yields

Bonds have multiple yield options depending on the exact nature of the investment. The coupon is the bond interest rate fixed at issuance. The current yield is the bond interest rate as a percentage of the current price of the bond. The yield to maturity is an estimate of what an investor will receive if the bond is held to its maturity date. Non-taxable municipal bonds will also have a tax-equivalent (TE) yield determined by the investor's tax bracket.

Mutual Fund Yields

Mutual funds have two primary forms of yields for consideration. The dividend yields are expressed as an annual percentage measure of the income that was earned by the fund's portfolio. The associated income is derived from the dividends and interest generated by the included investments. Additionally, dividend yields are based on the net income received after the fund's associated expenses have been paid, or at a minimum, accounted for.


Further Reading

'Like gold with yield': Evolving intersections between farmland and finance'Like gold with yield': Evolving intersections between farmland and finance
www.tandfonline.com [PDF]
… for certain diversification, but we are not willing to accept a lower yield on the … 2012) by exploring how developments in the relationship between farmland and finance extend beyond … by Gladstone, Bonnefield and others can provide farmers with much needed financing, but they …

The yield curve as a predictor of US recessionsThe yield curve as a predictor of US recessions
papers.ssrn.com [PDF]
… for certain diversification, but we are not willing to accept a lower yield on the … 2012) by exploring how developments in the relationship between farmland and finance extend beyond … by Gladstone, Bonnefield and others can provide farmers with much needed financing, but they …

The Composition, Yield and Risks of China's Foreign Exchange Reserve [J]The Composition, Yield and Risks of China's Foreign Exchange Reserve [J]
en.cnki.com.cn [PDF]
… for certain diversification, but we are not willing to accept a lower yield on the … 2012) by exploring how developments in the relationship between farmland and finance extend beyond … by Gladstone, Bonnefield and others can provide farmers with much needed financing, but they …

The yield curve as a leading indicator: Some practical issuesThe yield curve as a leading indicator: Some practical issues
papers.ssrn.com [PDF]
… for certain diversification, but we are not willing to accept a lower yield on the … 2012) by exploring how developments in the relationship between farmland and finance extend beyond … by Gladstone, Bonnefield and others can provide farmers with much needed financing, but they …

Some lessons from the yield curveSome lessons from the yield curve
www.aeaweb.org [PDF]
… for certain diversification, but we are not willing to accept a lower yield on the … 2012) by exploring how developments in the relationship between farmland and finance extend beyond … by Gladstone, Bonnefield and others can provide farmers with much needed financing, but they …

The bond yield'conundrum'from a macro-finance perspectiveThe bond yield'conundrum'from a macro-finance perspective
papers.ssrn.com [PDF]
… for certain diversification, but we are not willing to accept a lower yield on the … 2012) by exploring how developments in the relationship between farmland and finance extend beyond … by Gladstone, Bonnefield and others can provide farmers with much needed financing, but they …

Macro news and bond yield spreads in the euro areaMacro news and bond yield spreads in the euro area
www.tandfonline.com [PDF]
… for certain diversification, but we are not willing to accept a lower yield on the … 2012) by exploring how developments in the relationship between farmland and finance extend beyond … by Gladstone, Bonnefield and others can provide farmers with much needed financing, but they …

The US Treasury yield curve: 1961 to the presentThe US Treasury yield curve: 1961 to the present
www.sciencedirect.com [PDF]
… for certain diversification, but we are not willing to accept a lower yield on the … 2012) by exploring how developments in the relationship between farmland and finance extend beyond … by Gladstone, Bonnefield and others can provide farmers with much needed financing, but they …

Fair value accounting in finance industry and yield/discount curve development–case study CroatiaFair value accounting in finance industry and yield/discount curve development–case study Croatia
www.bib.irb.hr [PDF]
… for certain diversification, but we are not willing to accept a lower yield on the … 2012) by exploring how developments in the relationship between farmland and finance extend beyond … by Gladstone, Bonnefield and others can provide farmers with much needed financing, but they …


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