Gross Yield
The gross yield of an investment is its profit before taxes and expenses are deducted. Common bond yield terms include nominal yield, current yield, and yield to maturity. Other commonly-used measurements of yield include nominal yield, current yield, and yield to maturity. Gross yield is a measurement used for many investments including real estate, fixed-income investments, and mutual fund investments. Mutual fund yields are reported in two ways: Dividend yields are expressed as an annual percentage of a fund’s portfolio income, also based on the net income received after the fund's associated expenses have been paid.
What Is Gross Yield?
The gross yield of an investment is its profit before taxes and expenses are deducted. Gross yield is expressed in percentage terms. It is calculated as the annual return on an investment prior to taxes and expenses, divided by the current price of the investment.
How Gross Yield Works
Gross yield is a measurement used for many investments including real estate, fixed-income investments, and mutual fund investments. But it is only one way to measure the return on an investment.
For example, a stock that pays $3 in annual dividends and is currently trading at $60 a share has a gross (dividend) yield of 5.0%. If there is a withholding tax of 10% on the dividend payments, the net dividend yield would be 4.5%.
In the case of some investments such as rental property, the difference between gross and net yields can be significant since the income can be substantially eroded by operating expenses such as maintenance expenditures, insurance, and property taxes.
Other commonly-used measurements of yield include nominal yield, current yield, and yield to maturity.
And, mutual fund investors need to carefully watch the difference between the gross and net yields on their investments in order to be certain that fund management fees and brokerage fees, or both, are not taking a big bite out of their real returns.
Gross Yield, Bond Yields, and Mutual Fund Yields
Common bond yield terms include nominal yield, current yield, and yield to maturity.
Mutual Fund Yields
Mutual fund yields are reported in two ways:
Related terms:
Average Price
Average price is the mean price of an asset or security observed over some period of time. read more
Bond Yield : Formula & Calculation
Bond yield is the amount of return an investor will realize on a bond, calculated by dividing its face value by the amount of interest it pays. read more
Coupon Rate
A coupon rate is the yield paid by a fixed income security, which is the annual coupon payments divided by the bond's face or par value. read more
Coupon Equivalent Rate (CER)
The coupon equivalent rate (CER) is an alternative calculation of coupon rate used to compare zero-coupon and coupon fixed-income securities. read more
Dividend Yield
The dividend yield is a financial ratio that shows how much a company pays out in dividends each year relative to its stock price. read more
Nominal Yield
A bond's nominal yield, depicted as a percentage, is calculated by dividing all the annual interest payments by the face value of the bond. read more
Yield
Yield is the return a company gives back to investors for investing in a stock, bond or other security. read more
Yield to Maturity (YTM)
Yield to maturity (YTM) is the total return expected on a bond if the bond is held until maturity. read more