What is 'Earnings Yield'
Earnings yield are the earnings per share for the most recent 12month period divided by the current market price per share. The earnings yield (which is the inverse of the P/E ratio) shows the percentage of each dollar invested in the stock that was earned by the company.
The earnings yield is used by many investment managers to determine optimal asset allocations.
BREAKING DOWN 'Earnings Yield'
Money managers often compare the earnings yield of a broad market index (such as the S&P 500) to prevailing interest rates, such as the current 10year Treasury yield. If the earnings yield is less than the rate of the 10year Treasury yield, stocks as a whole may be considered overvalued. If the earnings yield is higher, stocks may considered undervalued relative to bonds.
Economic theory suggests that investors in equities should demand an extra risk premium of several percentage points above prevailing riskfree rates (such as Tbills) in their earnings yield to compensate them for the higher risk of owning stocks over bonds and other asset classes.

Bond Equity Earnings Yield Ratio ...
A metric used to evaluate the relationship between bond yields ... 
Bond Yield
The amount of return an investor will realize on a bond. Several ... 
Money Market Yield
The interest rate earned by investing in securities with high ... 
Yield
The income return on an investment. This refers to the interest ... 
Running Yield
The annual income on an investment divided by its current market ... 
Free Cash Flow Yield
An overall return evaluation ratio of a stock, which standardizes ...

Investing Basics
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Professionals
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Bonds & Fixed Income
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Term
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Mutual Funds & ETFs
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What is the difference between yield and rate of return?
Read about the differences between yield and rate of return. See why many novice investors often struggle more with the concept ... Read Answer >> 
Can I use the current yield to compare a bond to an equity investment?
Learn about the different types of yield measurements for stocks and bonds, and find out how to make careful comparisons ... Read Answer >> 
What is the difference between the yield of stock and the yield of a bond?
Explore and understand the various meanings of the investment term "yield" as it is applied to equity investments and bond ... Read Answer >> 
What does the forward p/e indicate about a company?
Explore the forward price to earnings ratio and learn its significance and how it compares to the traditional price to earnings ... Read Answer >> 
What is the relationship between the current yield and risk?
Discover the relationship between a bondâ€™s current yield and risk, and how investors can use it to benefit their overall ... Read Answer >> 
Which economic factors impact treasury yields?
Discover the economic factors that impact Treasury yields. Treasury yields are the benchmark yield for the rest of the world, ... Read Answer >>