Yield
Definition
The income an investment generates annually, expressed as a percentage. A bond yielding 4% generates $40 yearly per $1,000 invested. Yield focuses on income (interest, dividends) not price appreciation. Bonds and dividend stocks have yields; growth stocks typically don't.
Why It Matters
Yield matters if you need income from your investments (like in retirement). A 3% yield on $500,000 provides $15,000 annually without selling anything. It's less exciting than growth but more reliable and less dependent on market prices.
Example
Own $100,000 in bonds yielding 4%. You earn $4,000/year. Own $100,000 in dividend stocks yielding 2%. You earn $2,000/year. Own $100,000 in growth stocks with 0% yield. You earn $0/year but hope for price appreciation.
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Pulsafi definitions are sourced from primary regulatory and industry references. See our methodology and data sources.