Current yield calculator
By Jude Wallis
Current yield is the annual coupon in dollars divided by the price you actually paid. A $50 coupon on a bond bought at $857.88 is 5.83 percent. Pay $1,171.69 for that same coupon and the current yield drops to 4.27 percent.
Current yield
5.83%
$50.00 of coupon cash on a price of $857.88.
- Annual coupon
- $50.00
- Price
- $857.88
- Current yield
- 5.83%
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On this page
The formula
The numerator is a dollar amount, face value times the coupon rate. The denominator is the price paid, not face value, which is the whole reason the two differ.
The top of the fraction is dollars
A coupon rate is a percentage of face. A coupon is money. On a bond with 1000 of face and a 5 percent coupon rate, the annual coupon is , and that $50 is what goes on top of the fraction. It stays at $50 whatever happens to the price, which is what makes current yield move.
If the bond pays twice a year, add the two payments rather than using one of them. Halving the coupon by accident halves the yield, and that error looks perfectly reasonable on the page.
The bottom is what you paid
Price is the only moving part. At $857.88 the $50 coupon is , so 5.83 percent. At $1,171.69 the same $50 is 4.27 percent. Nothing about the bond changed; the entry price did.
This is why current yield is quoted on the price you paid rather than the price it trades at today, if you want to know your own income return. Quoted against the market price it tells you what a buyer today would earn. Both are correct, and they answer different questions. See yield for the general form.
It stops at this year's income
Current yield ignores maturity completely. The $857.88 bond returns its face value of 1000 at the end, and that gain never appears in a 5.83 percent figure. The $1,171.69 bond returns less than its price at maturity, and that loss never appears either. Yield to maturity is the number that includes both.
What current yield is good at is comparing income right now against another income stream: a rental yield, a dividend yield, a savings rate. Same shape, same year, no maturity assumption.
Where this figure fits
Current yield is an income ratio on one bond at one price. It is exact, it is quick, and it is directly comparable to any other one-year income yield you can name. Read next to current yield against YTM, it tells you how much of a bond's return is arriving as coupons rather than as the pull to face. This is educational material, not financial advice.
Worked examples
A \$50 coupon bought at a discount
A bond pays $50 of coupons a year and costs $857.88. What is the current yield?
- The annual coupon is $50, which is the numerator.
- Divide by the price paid: .
- As a percentage that is 5.83 percent.
The current yield is 5.83 percent: a $50 coupon against a $857.88 price.
The same coupon bought at a premium
The coupon is still $50 a year, but the price is now $1,171.69. What is the current yield?
- The coupon does not move with the price, so the numerator is still $50.
- Divide by the higher price: , which is 4.27 percent.
The current yield is 4.27 percent. The same $50 of income costs more, so it buys a lower rate at $1,171.69.
Dividing by face value
Divide the coupon by face and you have recomputed the coupon rate, which was already known and which no buyer earns unless the bond was bought at par. The denominator has to be the price paid. That single substitution turns 5.83 percent back into 5 percent and hides the discount entirely.
Common questions
Should I use the price I paid or today's price?
Use the price you paid to measure your own income yield, and the market price to see what a buyer today would get.
Does current yield work for stocks?
The same shape does. Annual dividend over price is a dividend yield, computed exactly this way.
Is this financial advice?
No. It is educational material for the income over price identity.
Keep reading
This page is educational material, not financial advice. The figures come from the formula shown and assume the inputs you enter hold for the whole term. Your own rate, fees, taxes and timing will differ, so treat the output as arithmetic to check a decision against, not as a recommendation.