Yield
Definition
Yield is the income generated by an investment, typically expressed as a percentage of the investment's cost or current market value.
Explanation
Yield measures the income return on an investment, such as interest from bonds or dividends from stocks. Current yield is calculated as annual income divided by the current market price. Dividend yield is annual dividends divided by stock price. Bond yield depends on coupon payments and the bond's price.
Yield is different from total return, which includes both income and capital appreciation. A high yield may indicate a good income stream but can also signal higher risk.
Example
A stock priced at $100 paying $4 per year in dividends has a 4% dividend yield. A bond with a 5% coupon has a 5% yield if purchased at par value.