What does a stock's 'yield' mean?
You may have noticed a stock's 'yield' when looking at its financial data, but what exactly does this mean? A yield is a measure of the income that an investor can expect to receive from a stock, expressed as a percentage of the stock's price. For example, if a stock has a yield of 2%, and its price is £100 per share, an investor can expect to receive £2 in annual income from that stock. The yield of a stock is determined by the amount of income that the stock generates, divided by its price. For example, if a stock pays out $1 in dividends per year and its price is £100, its yield would be 1%. If the price of the stock increases to £200, its yield would drop to 0.5% because the same amount of income is now being divided by a higher price. The yield of a stock is an important factor for investors to consider when evaluating the potential return on their investment. In general, stocks with higher yields are considered to be more attractive to income-oriented investors, w...