Return versus Yield
Return is the financial gain or loss on an investment and is typically expressed as the change in dollar value of an investment over time.
Return also referred to as "total return," expresses what an investor earned on an investment during a certain time period in the past. It includes interest, dividends, and capital gain (such as an increase in the share price). In other words, a return is retrospective, or backwardlooking and describes what an investment earned over a period.
For example, if you bought a stock for $50 and sold it at $60, your return would be $10 for the investment. If the company paid a dividend of $1 during the time you held the stock, your total return would be $11 including the capital gain and dividend. A positive return is a profit on an investment, and a negative return is a loss on an investment.
Yield is the income returned on an investment, such as the interest received from holding a security. The yield is usually expressed as an annual percentage rate based on the investment's cost, current market value, or face value. Yields may be considered known or anticipated depending on the security in question as certain securities may experience fluctuations in value.
Yield is forwardlooking. Furthermore, it measures the income, such as interest and dividends, that an investment earns and ignores capital gains. This income is taken in the context of a specific time period and then annualized, with the assumption that the interest or dividends will continue to be received at the same rate.
Bond yields can have multiple yield options depending on the exact nature of the investment. The coupon is the bond interest rate fixed at issuance, and the coupon rate is the yield paid by a fixedincome security. The coupon rate is the annual coupon payments paid by the issuer relative to the bond's face or par value.
The current yield is the bond interest rate as a percentage of the current price of the bond. The yield to maturity is an estimate of what an investor will receive if the bond is held to its maturity date.
Risk and Yield
Risk is an important component of the yield paid on an investment. The higher the risk, the higher the associated yield potential. Some investments are less risky than others. For example, U.S. Treasuries carry less risk than stocks. Since stocks are considered to carry a higher risk than bonds, stocks typically have a higher yield potential to compensate investors for the added risk.
What's the difference between Rate of Return and Yield?
Rate of return and yield describe the performance of investments over a set period of time (typically one year), but they have subtle and sometimes important differences. The rate of return is a specific way of expressing the total return on an investment that shows the percentage increase over the initial investment cost. Yield shows how much income has been returned from an investment based on initial cost, but it does not include capital gains in its calculation.
Rate of return can be applied to nearly any investment, while yield is somewhat more limited because not all investments produce interest or dividends. Mutual funds, stocks, and bonds are three common types of securities that have both rates of return and yields.
The formula for rate of return is:
[(Current price  Original price) / Original price] x 100
In our earlier example, you bought a stock for $50 and sold it at $60, your return would be $10 for the investment. With the dividend of $1 during the time you held the stock, your total return was $11 including the capital gain and dividend. Your rate of return is:
($60 (current price) +$1 (dividend)  $50 (original price)) / $50 = .22 * 100 = 22% rate of return
Consider a mutual fund, for example. Its rate of return can be calculated by taking the total interest and dividends paid and combining them with the current share price, then dividing that figure by the initial investment cost. The yield would refer to the interest and dividend income earned on the fund, but not the increase (or decrease) in share price.
There are several different types of yield for each bond: coupon rate, current yield, and yield to maturity. Yield can also be less precise than rate of return, since it is often forwardlooking, where rate of return is backwardlooking. Many types of annual yields are based on future assumptions that current income will continue to be earned at the same rate.
To learn more about returns, please read How to Calculate Your Investment Return.
To learn more about yield, check out the Bond Basics Tutorial.

What is the difference between yield and dividend?
Learn how to differentiate between dividend yield and dividend return, and see why dividend yield is the more popular rate ... Read Answer >> 
If I buy a $1,000 bond with a coupon of 10% and a maturity in 10 years, will I receive ...
See how fixedincome security investors can expect to use coupon rates on semiannual payments if the bond or debt instrument ... Read Answer >> 
How are bond yields affected by monetary policy?
Learn about how bond yields are affected by monetary policy. Find out how this determines the riskfree rate of return and ... Read Answer >> 
Why do some preferred stocks have a higher yield than common stocks?
Before we answer this question, let's just take a quick review of what a stock's yield is actually measuring.The yield is ... Read Answer >>

Investing
Understanding the Different Types of Bond Yields
Any investor, private or institutional, should be aware of the diverse types and calculations of bond yields before an actual investment. 
Investing
Comparing Yield To Maturity And The Coupon Rate
Investors base investing decisions and strategies on yield to maturity more so than coupon rates. 
Investing
How to Get More Yield From Your Investments
Yield seeking investors can boost the amount of income their investments generate through tweaking their portfolio of stocks and bonds. 
Investing
A History of the S&P 500 Dividend Yield
Find out why the dividend yield for the S&P 500 Index remains historically low, and what dividend yields used to look like before the Internet Age. 
Investing
Comparing P/E Ratio, EPS and Earnings Yield
P/E ratios may be the established standard for valuation, but earnings yields are especially useful for comparing returns across different instruments. 
Investing
Are HighYield Dividend Stocks Good for Income Investors?
Highyield dividend stocks can be an enticing alternative for income, but it's important to research them carefully before investing. 
Investing
Bond yield curve holds predictive powers
This measure can shed light on future economic activity, inflation levels and interest rates. 
Financial Advisor
4 Dividend ETFs to Help Fund Your Retirement
Investing in stocks that pay out dividends can be a smart way to establish a reliable income stream in retirement. Here are four lowfee dividend ETFs. 
Investing
High Dividend Stocks: 3 Things to Consider Before Buying
Discover some of the risks involved in investing in highyield stocks, and learn about some of the factors that you should consider before investing.

Yield
Yield is the return a company gives back to investors for investing ... 
Gross Yield
The gross yield is the yield on an investment before the deduction ... 
Average Annual Yield
The average yield on is the sum of all interest, dividends or ... 
Yield On Cost (YOC)
Yield on Cost (YOC) is the annual dividend rate of a security ... 
Breakeven Yield
The breakeven yield is the yield required to cover the cost of ... 
Yield Basis
The yield basis is a method of quoting the price of a fixedincome ...