The income an investment pays each year, as a percent of what it costs.
The meaning
A simple way to measure how much income an investment pays you relative to its price. Yield is shown as a percentage. If something has a 5% yield, you’d expect to get back about $5 a year for every $100 you put in. This number can go up and down over time. Think of it as an estimate, not a promise.
Example
$45paid a year÷$1,000bond price=4.5%yield
Yield answers one question: how much does each dollar pay me each year?Walk through the numbers
A $1,000 bond that pays $45 a year has a 4.5% yield. A $100 share that pays $3 a year in dividends has a 3% yield.
Why it matters
Yield turns any investment into one simple question: how much does each dollar pay me each year?
For education only and not personalized investment advice. Examples are hypothetical illustrations, not a prediction or a promise of results. All investing involves risk, including the possible loss of principal.
