Capital gains yield definition
/What is Capital Gains Yield?
Capital gains yield is the percentage price appreciation on an investment. It is calculated as the increase in the price of an investment, divided by its original acquisition cost. If the price of an investment falls below its purchase price, there is no capital gains yield.
This concept does not include any dividends received; it is only based on changes in the price of an investment. To calculate the total return on a share, an investor must combine the capital gains yield and the dividend yield.
Example of Capital Gains Yield
For example, if a security is purchased for $100 and later sold for $125, the capital gains yield is 25%. If the security were to also pay out a $5 dividend, this would have no impact on the measurement, since it excludes any income received from the investment.