Average Annual Yield

AAA

DEFINITION of 'Average Annual Yield'

The average yield on an investment or a portfolio that results from adding all interest, dividends or other income generated from the investment, divided by the average of the investments for the year. The average annual yield is a particularly useful tool for floating-rate investments, in which the fund's balance and/or the interest rate change frequently.

INVESTOPEDIA EXPLAINS 'Average Annual Yield'

For example, for a savings account that pays a floating rate of interest on balances, the average yield can be calculated by adding all interest payments for the year and dividing that number by the average balance for the year. The average annual yield is a backward-looking measurement and can be very useful in determining the actual performance of a mixture of investments.

RELATED TERMS
  1. Return On Invested Capital - ROIC

    A calculation used to assess a company's efficiency at allocating ...
  2. Yield

    The income return on an investment. This refers to the interest ...
  3. Realized Yield

    The actual amount of return earned on a security investment over ...
  4. Current Yield

    Annual income (interest or dividends) divided by the current ...
  5. Annual Percentage Yield - APY

    The effective annual rate of return taking into account the effect ...
  6. Surrender Period

    The amount of time an investor must wait until he or she can ...
RELATED FAQS
  1. What is the average annual dividend yield of companies in the oil & gas drilling ...

    Within the energy sector, companies that engage in activities related to producing or supplying oil and gas by way of exploration, ... Read Full Answer >>
  2. How should I estimate my income from fixed sources like bonds, CDs and stocks?

    Once investors know the approximate due dates and yields of their holdings, they can do a few simple calculations in a spreadsheet ... Read Full Answer >>
Related Articles
  1. Retirement

    Bond Basics Tutorial

    Investing in bonds - What are they, and do they belong in your portfolio?
  2. Bonds & Fixed Income

    Advanced Bond Concepts

    Learn the complex concepts and calculations for trading bonds including bond pricing, yield, term structure of interest rates and duration.
  3. Options & Futures

    Investing 101: A Tutorial For Beginner Investors

    Do want to invest, but don't know how to begin? We'll show you the building blocks you need to get started.
  4. Stock Analysis

    How Chimera Investment Bear The Brunt Of REITst?

    Following the financial crisis, REITs that specialized in investing in mortgage-backed securities produced huge gains for their shareholders.
  5. Stock Analysis

    What Are Kinder Morgan’s Plans For Growth In 2016?

    One thing investors likely love about Kinder Morgan is its robust backlog of future projects, like growing its generous dividend by 10% per year.
  6. Mutual Funds & ETFs

    The ABCs of Mortgage-Backed Securities ETFs

    ETFs focused on mortgage-backed securities, or MBS, offer an opportunity to further diversify the fixed-income portion of your portfolio.
  7. Stock Analysis

    What’s The Highest Dividend-Paying Tech Stock?

    Technology stocks tended not to pay dividends, preferring to reinvest available capital back into their respective businesses to accelerate their growth.
  8. Investing

    Is Caterpillar Here To Stay?

    Because Caterpillar is the largest construction and mining equipment manufacturer in the world, investors can count on it to keep paying dividends.
  9. Investing

    Windstream's Strategy For Dividend Investors

    Windstream Holdings has been among the top dividend-paying stocks in the market, with double-digit percentage yields that have stood the test of time.
  10. Economics

    What Would Happen If Interest Rates Rise?

    This time around, while U.S. long-term yields have rebounded from their January lows, rates have generally been lower than where they ended 2014.

You May Also Like

Hot Definitions
  1. Efficiency Ratio

    Ratios that are typically used to analyze how well a company uses its assets and liabilities internally. Efficiency Ratios ...
  2. Fixed Cost

    A cost that does not change with an increase or decrease in the amount of goods or services produced. Fixed costs are expenses ...
  3. Subsidy

    A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy ...
  4. Sunk Cost

    A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business ...
  5. Technical Skills

    1. The knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as ...
  6. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
Trading Center