current yield
C1Formal, Technical, Business
Definition
Meaning
A financial ratio that shows the annual income (interest or dividends) from an investment as a percentage of its current market price.
A measure of the return on an investment in bonds, stocks, or other securities based solely on the income received over a year relative to its current price, ignoring potential capital gains or losses.
Linguistics
Semantic Notes
This is a specific financial term (a noun phrase). It differs from 'dividend yield' (which applies to stocks) and 'yield to maturity' (which considers total return). 'Current' refers to the present market price, not the original purchase price.
Dialectal Variation
British vs American Usage
Differences
Spelling and pronunciation are the main differences. The concept and usage are identical. UK English more frequently uses 'flat yield' as a near-synonym.
Connotations
Neutral, technical term in both varieties. No significant connotative difference.
Frequency
Equally common in both UK and US financial contexts.
Vocabulary
Collocations
Grammar
Valency Patterns
The current yield on [SECURITY] is [NUMBER]%[SECURITY] offers a current yield of [NUMBER]%to calculate the current yield of [SECURITY]Vocabulary
Synonyms
Strong
Neutral
Weak
Vocabulary
Antonyms
Phrases
Idioms & Phrases
- “[Not applicable for this technical term]”
Usage
Context Usage
Business
Essential term in investment analysis, brokerage reports, and financial news. Used to compare income-generating assets.
Academic
Used in finance, economics, and business studies textbooks and papers.
Everyday
Rare, except when discussing personal investments with a financial advisor or in sophisticated personal finance contexts.
Technical
A precise metric in fixed-income analysis and equity valuation models. Contrasted with yield to maturity and yield to call.
Examples
By Part of Speech
verb
British English
- [Not applicable as a verb]
American English
- [Not applicable as a verb]
adverb
British English
- [Not applicable as an adverb]
American English
- [Not applicable as an adverb]
adjective
British English
- [Not applicable as a standalone adjective]
American English
- [Not applicable as a standalone adjective]
Examples
By CEFR Level
- [Too advanced for A2 level]
- The bond has a current yield of 4%.
- When the share price fell, its current yield became more attractive to income investors.
- While the yield to maturity provides a more comprehensive picture, many investors still screen for bonds based solely on their current yield, especially in a volatile interest rate environment.
Learning
Memory Aids
Mnemonic
Think of an electric CURRENT bringing power NOW. CURRENT yield tells you the income power of your investment RIGHT NOW, based on its current price.
Conceptual Metaphor
INCOME IS A FLOW (current like a river), THE SECURITY IS A SOURCE (of that flow).
Watch out
Common Pitfalls
Translation Traps (for Russian speakers)
- Avoid direct translation as 'текущий урожай' (literal agricultural yield). The correct terms are 'текущая доходность' or 'дивидендная доходность' (for stocks).
- Do not confuse with 'yield' as 'уступать'; here it's exclusively 'доходность'.
Common Mistakes
- Using 'current yield' to refer to the yield based on the original purchase price (that is 'yield on cost').
- Confusing 'current yield' (income only) with 'total return' (income + capital gain/loss).
- Pronouncing 'current' as /kaɪˈrənt/ instead of /ˈkʌrənt/ or /ˈkɜːrənt/.
Practice
Quiz
What does 'current yield' primarily measure?
FAQ
Frequently Asked Questions
For dividend-paying stocks, yes, the terms are often used interchangeably. However, 'dividend yield' is more specific to equities, while 'current yield' can apply to bonds as well.
It changes whenever the market price of the security changes or when the annual income payment (coupon or dividend) is altered. If the price goes up, the yield goes down, and vice versa, assuming the income payment stays the same.
It ignores capital gains or losses. An investor might have a high current yield but lose money if the security's price falls significantly. It also doesn't account for the time value of money or reinvestment risk.
Divide the annual income payment (e.g., annual coupon for a bond, annual dividend for a stock) by the current market price of the security, then multiply by 100 to get a percentage. Formula: (Annual Income / Current Market Price) * 100%.