What Is a 30-Day Yield? | The Motley Fool (2024)

FAQs

What Is a 30-Day Yield? | The Motley Fool? ›

The 30-day yield is an SEC-standardized metric that helps bond fund investors compare assets. It's based on the most recent 30 days of income for a particular bond fund. This metric is different from the distribution yield, which is in no way standardized or regulated.

30-Day Yield: A standard yield calculation developed by the SEC. For bond funds, the yield is calculated by dividing the net investment income per share earned during the 30-day period by the maximum offering price per share on the last day of the 30-day period.

A calculation based on a 30-day period ending on the last of the previous month. It is computed by dividing the net investment income per share earned during the period by the maximum offering price per share on the last day of the period.

The SEC yield is an annualized figure based on returns over the most recent 30-day period. As outlined above, the distribution yield, on the other hand, takes the most recent distribution, multiplies it by 12 to get an annualized total, and then divides the result by the NAV.

7-day yield vs.

APY (annual percentage yield) is a similar term frequently used for the interest bank accounts might make over 1 year. It estimates the percentage an account would earn in a year with compounding interest. On the other hand, 7-day yield does not take compounding (reinvesting your earnings) into account.

In general, 12-Month Yield gives a good picture of the current yield investors are receiving from their funds. (SEC Yield, in contrast, is a good measure of the income return currently priced into a fund's bonds.)

What Is a Good Dividend Yield? Yields from 2% to 6% are generally considered to be a good dividend yield, but there are plenty of factors to consider when deciding if a stock's yield makes it a good investment. Your own investment goals should also play a big role in deciding what a good dividend yield is for you.

Yield is a measure of the fund's income distributions, as a percentage of the fund price. Morningstar calculates this figure by summing the income distributions over the trailing 12 months and dividing that by the sum of the last month's ending NAV plus any capital gains distributed over the 12-month period.

What is more important dividend rate or yield? ›

Both metrics are important for equities investors. While the dividend rate indicates total expected income, the dividend yield provides more information on the rate of return and can be useful in comparing different income-paying assets. Apple, Investor Relations.

The dividend yield measures how much income has been received relative to the share price; a higher yield is more attractive, while a lower yield can make a stock seem less competitive relative to its industry.

Most investors would view an average annual rate of return of 10% or more as a good ROI for long-term investments in the stock market. However, keep in mind that this is an average. Some years will deliver lower returns -- perhaps even negative returns. Other years will generate significantly higher returns.

Average money market rates fall between 0.01% APY and 3.45% APY, again depending on your balance. Below, we've listed a number of popular banks and given a range of their basic money market account rates. Again, your rate will depend on your account balance.

Effective annual yield is calculated using the formula: (1+r/n)^n-1. Where r is the interest rate or coupon rate and n is the number of times the interest is paid per year.

Investors looking for income are smart to learn the basics of analyzing the yield of a mutual fund. In summary, the TTM yield shows yield over the past year, and the 30-day SEC yield shows the most current yield (as of the last 30 days).

Effective Annual Yield is a measure that calculates the actual annual return on investment, taking into account the compounding effect of any periodic returns within the year.

To discourage excessive trading and protect the interests of long-term investors, mutual funds keep a close eye on shareholders who sell shares within 30 days of purchase – called round-trip trading – or try to time the market to profit from short-term changes in a fund's NAV.