Common yield definitions include dividend yield (annual dividends ÷ share price), current yield (annual coupon ÷ bond price), yield to maturity (total return to maturity assuming all coupons reinvested), and earnings yield (earnings per share ÷ share price, the inverse of P/E). Each is appropriate for a specific decision.
Yield is not the same as total return. A stock yielding 6% may deliver a –10% total return if its share price falls. A 10-year bond yielding 2% may suffer a –15% mark-to-market loss if rates rise sharply. Always frame yield against expected price action and credit risk; very high yields almost always signal hidden risk ('chasing yield').
In a typical Swiss household balance sheet, the right yield assumptions are: 0.5–1.5% on cash and money-market funds, 1–2% on Confederation bonds, 3–4% on global equities (mostly capital appreciation, around 2% in dividends) and 5–7% on diversified REIT funds. Numbers depart from these only because the central bank has temporarily distorted the cycle.
Dividend yield = Annual dividend per share / Share price · 100%
A Nestlé share trades at CHF 95 and pays a CHF 3.00 annual dividend. Dividend yield: 3.00 / 95 = 3.16%. A 10-year Confederation bond with 1.5% coupon trades at CHF 1,020; current yield: 15 / 1,020 = 1.47%; YTM (if held 10 years): about 1.3%.