What is it that you’re looking for in terms of the type of yield you want, how do you want to judge your investments and your profits, what type of investment portfolio do you want to build? Talk to your broker about this and clarify your position.
A running yield is quite simply a calculation that takes the income from your returns (dividends or coupons) and divides it by the market price of that security thus working out its value as a percentage. An investor can then compare investment portfolio performances over time and determine whether to alter the makeup of their portfolio or not.
An investor may look strictly for income, a fund’s payout, if they’re the type of investor who needs a regular income and who doesn’t need to tap into their principal sum for their everyday living. Most bonds, stocks, CD’s and savings accounts pay out regular incomes, and even mutual funds which buy income-paying stocks or bonds will pass that profit onto the investor. This suits the investors who wants their investments to top up their regular income.
Finally, we have capital appreciation, which, as the name suggests, refers to your security going up in price and being worth more than what you bought it for originally. If the investor, or the fund manager, sells the stock, then you have capital gain, and if they choose to hold on to it, you have capital appreciation which means that the Net Asset Value (NAV) of the fund will increase.