Earning yield from an investment usually refers to the return you’re getting relative to the price you paid for the asset. It’s often used in the context of stocks, bonds, or real estate, and can mean slightly different things depending on the investment type:

📊 1. Stocks

• Earnings Yield = Earnings Yield=Earnings per Share (EPS)Stock Price\text{Earnings Yield} = \frac{\text{Earnings per Share (EPS)}}{\text{Stock Price}}Earnings Yield=Stock PriceEarnings per Share (EPS)​
• It’s the inverse of the P/E ratio.
• Example: If a company has an EPS of $5 and the stock trades at $100, the earnings yield is 5%.

💵 2. Bonds

• The relevant measure is the Yield to Maturity (YTM) or Current Yield:
  • Current Yield = Annual coupon / Bond price.
  • YTM accounts for both coupons and capital gain/loss if held to maturity.

🏠 3. Real Estate

• Typically measured as Cap Rate (Capitalization Rate): Cap Rate=Net Operating Income (NOI)Property Value\text{Cap Rate} = \frac{\text{Net Operating Income (NOI)}}{\text{Property Value}}Cap Rate=Property ValueNet Operating Income (NOI)​
• This shows the investment yield before financing costs.

🔑 Key Takeaways

• Earnings yield is simply “return per dollar invested.”
• Higher yield = potentially better value, but also may imply higher risk.
• Always compare the yield to alternatives (e.g., treasury bonds, savings rates, or average market returns).