Distribution Yield

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Definition of 'Distribution Yield'

Distribution yield is the income generated by a security, such as a bond or stock, that is paid out to investors. It is calculated by dividing the annual dividend by the current price of the security. For example, if a stock is trading at $100 and pays a dividend of $5 per year, the distribution yield is 5%.

Distribution yield is an important metric for investors to consider when evaluating a security. It can help investors determine how much income they can expect to receive from their investment, and it can also be used to compare different securities.

There are a few things to keep in mind when evaluating distribution yield. First, it is important to understand that distribution yield is not the same as total return. Total return includes both income and capital gains, while distribution yield only includes income. Second, it is important to consider the stability of the distribution yield. Some securities may have high distribution yields, but they may also be more volatile and have a lower total return.

Distribution yield can be a useful tool for investors, but it is important to use it in conjunction with other factors when making investment decisions.

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