Yield is the annual return on interest or dividend income. If you receive interest, dividends, or some other regular payment for your investment, you may want to calculate the yield in order to see if you are getting a good return on your investment compared to the other options available to you. Some yield calculations include the effect of compounding; others report simple interest.
First, find the principal of your investment. This is the amount of money you currently have invested in a particular item, such as a stock, bond, or property.
Determine how much you receive in payments from the investment over a certain period. For this example, let's figure out the annual yield on a stock that pays a quarterly dividend of ten cents a share.
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Calculate your annual interest or dividend income. Suppose you bought 100 shares of stock at $10 a share. If we ignore commissions, that makes a total investment of $1,000. The quarterly dividend of 10 cents a share would earn you $10 (0.10 X 100) after three months. Multiply that by 4 to discover that you receive $40 in a year.
Divide the yearly income of $40 by the principal of $1,000 to get a decimal of .04. Multiply that decimal by 100 to find your yield, which is 4 percent in this case.