Accounting Dictionary

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Yield

Definition: Yield is the rate of return on an investment, usually expressed as a percentage of the amount invested.

The yield is typically an annualized number. Thus, if there is an actual return of $100 on an investment of $1,000 after three months, it is considered to have a yield of 40% on an annualized basis (the actual 10% return multiplied by four quarters).

The yield calculation should include unrealized gains or losses on those investments that an investor continues to hold (such as bonds or stock); otherwise, the yield will only be based on dividends or interest payments, and so will not represent a complete picture of the return on investment.