Stock Yields: Turning Numbers Into a Strategy

While stock yields are often associated with dividends, they can take multiple forms, such as earnings yield or shareholder yield.

Featured Tickers: CF

• Explanation of dividend yield: current versus indicated and impact on valuation, risk and total return

• Overview of related yields: earnings yield, shareholder yield

• Tools and strategies: Using the AAII Stock Evaluator and the Dividend Grader, avoiding yield traps, and integrating yields with broader analysis

Yield is a measure of the income return on an investment. A stock’s yield is a snapshot of how much income the stock generates relative to its price.

The yield realized over a stock’s holding period can change over time and may significantly differ from the yield at purchase as well as the yield available to a new buyer today. This contrasts with a bond’s coupon (interest) rates, which are typically fixed and predictable over the life of the bond.

Furthermore, while stock yields are often associated with dividends, they can take multiple forms—such as earnings yield or shareholder yield. These yields offer different insights than the dividend yield does.