# Difference Between Capital Yield and Dividend Yield

Capital yield and dividend yield are both a company’s financial ratios, and both show the percentage change in investment. Capital yield is calculated by excluding dividends, and the dividend yield is calculated on market price.

/10

1 / 10

When an existing company offers its shares for sale to the existing shareholders, it is known as ___________.

2 / 10

Which country's currency is called the Baht?

3 / 10

Whose Liability is limited to the extent of his capital to the firm?

4 / 10

Office is a place where ___________.

5 / 10

Small scale firms are ____________ flexible in their functioning.

6 / 10

Overall and strategic planning is done by the ___________.

7 / 10

A Company is called an artificial person because _________.

8 / 10

_________ is an important consideration for setting up an office.

9 / 10

Membership in a Co-Operative Society is?

10 / 10

In case of death or insolvency of a partner the firm is?

## Capital Yield vs Dividend Yield

Capital yield refers to the total return on an investment, including capital gains and any income received, such as dividends. For example, if an investment increases by 10% and pays a 5% dividend, its capital yield would be 15%. The dividend yield measures the income received from dividends as a percentage of the investment’s value.

Want to save this article for later? Click the heart in the bottom right corner to save to your own articles box!

Capital gain yield is the proportion of price appreciation on investment. It is calculated as the increase in the price of an investment.

Capital yield formula = (P1-P0)/ P0 * 100

The Dividend yield is one of the financial ratios that measure the proportion of cash dividends paid out to shareholders as per stock price. The dividend yield formula can calculate it:

Dividend yield formula = Annual dividend per share/ Price per share * 100

## What is Capital Yield?

Capital gain yield is the proportion of price appreciation on investment. It is the calculated difference between the current price and the purchase price.

Capital yield formula = (P1-P0)/ P0 * 100

P0= Original purchase price of securities or share

P1= Current market price of securities or shares

Example:

Suppose we purchase a security or share at Rs. 1000 and later sell for Rs. 1250, so the capital gain yield is Rs 250, i.e., 25% of Rs 1000.

Capital yield= (1250-1000)/ 1000 * 100 = 25%

Therefore, investors earn a 25% gain on shares.

On capital gain yield, we can not receive any dividends. Still, the gain between the current price and purchase price of shares or securities is the capital gain yield, but when we have a loss on the share, the mean current price falls below the purchase price, i.e., not a capital yield.

Capital gain can be classified into realized or unrealized, and realized gain is divided into two parts, i.e., short-term gain and long-term gain. In some countries, realized gain is considered a taxable asset.

The Dividend yield is one of the financial ratios that measure the proportion of cash dividends paid out to shareholders as per stock price. The dividend yield formula can calculate it. It is also known as the Dividend price ratio.

## What is Dividend Yield?

Dividend yield formula = Annual dividend per share/ Price per share * 100

Example:

Suppose an organization with a share price of Rs 200 declared a dividend of Rs 30 per share. So, the dividend yield ratio per share will be 30/200*100 = 15%.

Therefore, an investor would earn a 15% dividend on shares.

An organization with a high dividend yield does not keep a handsome portion of the profit as retained earnings. A share with a high dividend yield is a good option for investment.

The Dividend varies from organization to organization because the mature organization provides a high dividend yield. Still, the fast-growing organization does not offer any dividends because it’s better to reinvest its profit for the growth of an organization.

The high or low dividend yield does not indicate the nature of the organization, i.e., good or bad.

## Main Differences Between Capital Yield and Dividend Yield

1. The Dividend yield is the profit percentage given by an organization to its investor, and capital gain yield is the profit earned while selling shares or securities.
2. Investors do not control the Dividend yield. It controls by senior management, but investors hold the Capital gain yield.
3. The Dividend yield depends on senior management’s decision, but the Capital yield depends on the current market situation.
4. The organization pays the Dividend yield according to these policies, which is part of the company’s profit. Capital yield is realized on the liquidation of securities on the market.
5. Dividends can be distributed periodically, and less investment is required. Capital yield happens once in the lifetime of an investment, and a significant investment is required for a handsome return.
One request?

I’ve put so much effort writing this blog post to provide value to you. It’ll be very helpful for me, if you consider sharing it on social media or with your friends/family. SHARING IS ♥️