Finance glossary
Yield
In simple terms
Yield is the income an investment pays you each year, shown as a percentage of what it costs — a bit like the interest rate on savings, but for shares, funds or bonds.
On this page
What does yield mean?
Yield measures the income an investment generates relative to its price. For a share it usually means the dividend yield; for a bond, the interest (coupon) relative to the price; for a property, the rent relative to the value.
It is a way to compare the income from different investments on a like-for-like basis.
How yield works
A simple dividend yield is the annual dividend divided by the current share price. If a share costs £10 and pays 40p a year, the yield is 4%. As the price moves, the yield moves the other way for the same income.
Yield is only part of the picture — it ignores any rise or fall in the value of the investment itself (capital growth or loss).
How could this affect me?
If you invest for income, yield tells you roughly what you might receive. But a very high yield can be a warning sign — it sometimes reflects a falling price because the market expects the income to be cut.
Total return (income plus any change in value) is usually a more meaningful measure than yield on its own.
Things to watch out for
- An unusually high yield can signal a falling price and a dividend at risk of being cut.
- Yield ignores capital losses — a 5% yield means little if the value drops 20%.
- Past or “historic” yield is not a promise of future income.
General information, not personal advice
Consumer Credit is an independent information service. We do not provide regulated financial advice or sell financial products. For advice on your own situation, speak to an appropriately authorised firm or a free service such as MoneyHelper. About Consumer Credit.
Sources
We checked this page against these official and authoritative sources.
- MoneyHelper, How shares and dividends work (opens in a new tab). Accessed 22 Aug 2026.