(1) The term used by newspapers on their price page for the dividend yield of a company. The dividend yield is the dividends per share (DPS) expressed as a percentage of the current share price. As a private investor you should be looking for high-quality blue chip shares which are on dividend yields of around 5% or more, because they may be under-priced.
(2)The yield on a bond is the effective interest rate on that bond at the current price. So treasury bills in the US and our own government bonds are bought and sold in a market. They are basically I.O.U.’s where the government has borrowed money with a specific fixed interest rate and repayment date. When current interest rates go up, then the interest rate on existing bonds becomes less attractive and their price falls to bring their effective interest rate into line with the interest rate that can be had on current bonds – and vice versa. When there is a high demand for bonds, their prices naturally rise – which makes the effective yield fall.Disclaimer - All information and data contained within the PDSnet Glossary terms is for informational and educational purposes only. PDSnet makes no representations as to the accuracy, completeness, suitability, or validity, of any information, and shall not be liable for any errors, omissions, or any losses, injuries, or damages arising from its display or use. Information in the PDSnet glossary terms is based on the author’s opinion and experience and should not be considered professional financial investment advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Thoughts and opinions will also change from time to time as more information is accumulated. PDSnet reserves the right to delete any glossary term for any reason.« Back to Glossary Index