Running Yield

There are two ways to earn money by investing. One is capital appreciation. That method involves the value of an asset (like a stock) going up. Buy low, sell high.

The other method of earning money comes from income. Dividends from stocks, or coupon payments from bonds. These investments generate what's called yield. It's usually given as a percentage of a purchase price. So...if a stock valued at $10 pays $1 in annual dividends, it would have a dividend yield of 1%.

A running yield does that calculation for your entire portfolio. Add up the value of everything. Add up the total income you receive from the portfolio. Divide income by portfolio value. That gives you the annual running yield.

If you have a $1 million portfolio that generates $50,000 in income for the year, your running yield would be 5%.