Dividend yield is the income a holding pays relative to its current value:
yield = dividends over the trailing period / current value
It answers the question: what is this position paying me, on what it is worth now?
The denominator is the catch
Yield has price in the denominator, so it moves whenever the price moves, even if the dividend never changes.
A position whose price falls by a third shows a yield that rises by half, having paid you nothing extra. This is the single most misread number in income investing: a yield that climbs on its own is usually reporting a falling price, not improving income.
The mirror image holds too. A position that has risen sharply shows a falling yield while paying you exactly as much as before.
The lesson is simple: when the percentage moves, check the amount. The amount tells you whether the numerator actually moved.
Trailing, not forward
This yield is built from dividends that have actually been paid, over the trailing window. It is not a forecast, and Gylder does not project what a holding will pay next year on the strength of last year.
So a recently cut dividend keeps showing until it ages out of the window, and a recently raised one takes time to show up fully.
Yield on value versus yield on cost
A second figure divides the same income by what you originally paid instead.
Divides byAnswersDividend yieldCurrent valueWhat is this paying me on what it is worth?Yield on costOriginal purchase priceWhat is my original outlay producing?
Someone who bought cheaply years ago and watched the price triple sees a modest yield next to an impressive yield on cost. Both are correct. It is worth knowing which one you are reading.
In practice
In Gylder, yield sits as a column in the holdings table on the Overview tab, alongside a dividends over twelve months column. That second one is the cash amount rather than the percentage, and it is exactly the column you need to interpret a moving yield.
For closed positions that column reads as lifetime dividends instead, since a trailing twelve-month window means little once you no longer hold it. The Dividends tab plots the payment history over time.
Related terms
- Portfolio: a position's weight in the whole
- Volatility: why price movement distorts every percentage
- Diversification: why high yield is rarely well spread
Want to know what your investments actually returned, dividends included? Read Calculating your portfolio's real return.