Capital Gains Yield

AAA

DEFINITION of 'Capital Gains Yield'

The price appreciation component of a security's (such as a common stock) total return. For stock holdings, the capital gains yield will be the change in price divided by the original (purchase) price.

Calculated as:

Capital Gains Yield



Where:
P0 = Original price of the security
P1 = Current/Selling price of the security

INVESTOPEDIA EXPLAINS 'Capital Gains Yield'

For example, suppose Peter purchased a share of XYZ for $100 and he later sells the share for $110. The capital gains yield for that investment would be 10%.

It is important to analyze both the capital gains yield and the total return yield of an investment holding. Dividends are not to be counted in a capital gains yield assessment, but keep in mind that depending on the stock, dividends could comprise a substantial portion of the total return of the stock compared to capital gains.

RELATED TERMS
  1. Dividend

    A distribution of a portion of a company's earnings, decided ...
  2. Capital Loss

    The loss incurred when a capital asset (investment or real estate) ...
  3. Return On Capital Gains

    The return that one gets from an increase in the value of a capital ...
  4. Unrealized Gain

    A profit that exists on paper, resulting from any type of investment. ...
  5. Phantom Gain

    A situation that arises when a gain on an investment is offset ...
  6. Capital Gain

    1. An increase in the value of a capital asset (investment or ...
RELATED FAQS
  1. What are unrealized gains and losses?

    An unrealized loss occurs when a stock decreases after an investor buys it, but he or she has yet to sell it. If a large ... Read Full Answer >>
  2. What is the difference between yield and return?

    Because investors are very concerned with how well their investments are performing or how they are expected to perform, ... Read Full Answer >>
  3. When do stock market exchanges close?

    Closing times for stock market exchanges vary, but they generally close in the evening except on holidays. A stock market ... Read Full Answer >>
  4. What are some examples of different taxable events?

    A taxable event is any event or occurrence that results in a tax liability. All investors or parties that pay taxes experience ... Read Full Answer >>
  5. Why is the time value of money (TVM) an important concept to investors?

    The time value of money (TVM) is an important concept to investors because a dollar on hand today is worth more than a dollar ... Read Full Answer >>
  6. What commodities are not tradable?

    As of February 2015, commodities that are not tradable include diamonds, tomatoes, carbon dioxide, lemons, eggs, potatoes, ... Read Full Answer >>
Related Articles
  1. Taxes

    Capital Gains Tax 101

    Find out how taxes are applied to your investment returns and how you can reduce your tax burden.
  2. Investing

    Understanding Smart Beta Sources of Returns

    In part 2, BlackRock explains how Smart Beta beats other active investment strategies.
  3. Investing

    Smart Beta in Portfolios

    In part 3, BlackRock explains how Smart Beta is a powerful tool for investors.
  4. Investing

    Disadvantages Of Stock Simulators

    Stock simulators enable one to practice trading, but they have some disadvantages that you should be aware of, before transitioning to actual trading.
  5. Investing

    Crowdfunding: Wide Opening For Tech Investors

    Crowdfunding has dramatically changed investing and opened the door for the public to get in on all types of exciting startups, including tech firms.
  6. Professionals

    Ready For The Entrepreneurial Leap?

    There are key traits and motivations that characterize an entrepreneur; these aren't necessarily genetic, but can be acquired over time.
  7. Investing Basics

    Here's How To Tap International Markets

    Access to foreign markets has grown a lot in recent years, allowing US market players to trade these bourses in real-time.
  8. Investing

    What's a Small Cap Stock?

    The “cap” in small cap stocks refers to a company’s capitalization as determined by the total market value of its publicly traded shares. Small cap stocks are generally defined as the stock of ...
  9. Investing

    What is Market Value?

    Market value is the price of an asset that is traded or offered for sale in a public forum where multiple buyers are allowed to make offers to buy that asset.
  10. Professionals

    What is a Corporation?

    A corporation is an organization—usually a large business—with specific characteristics.

You May Also Like

Hot Definitions
  1. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  2. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  3. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
  4. Brand Equity

    The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent. ...
  5. Adverse Selection

    1. The tendency of those in dangerous jobs or high risk lifestyles to get life insurance. 2. A situation where sellers have ...
Trading Center