Legal Definitions - net yield

Net yield refers to the actual profit or return generated from an investment, asset, or transaction, after all associated costs, expenses, and taxes have been deducted. It represents the true financial benefit received, as opposed to the gross yield, which is the total return before any deductions. Essentially, it's what you truly keep in your pocket.

• Real Estate Rental Income: Imagine an individual who owns a small commercial building and rents out office space to various businesses. The total rent collected from all tenants each month is the gross income. However, the owner also has to pay for property taxes, building insurance, maintenance (like cleaning services and repairs), utilities for common areas, and possibly a property management fee. The net yield is the amount of money the owner has left after all these expenses are paid, representing their actual profit from the rental property.

  How this illustrates net yield: The gross rent is reduced by all operating expenses and taxes to arrive at the final, true profit the owner realizes from the property.

• Investment in a Dividend Stock: A person invests in a company's stock that pays regular dividends. The total amount of dividends received from the stock over a year is the gross yield. However, the investor might incur brokerage fees for managing their investment account, and they will likely have to pay income tax on the dividends received. The net yield is the actual cash return the investor receives after these fees and taxes have been subtracted from the gross dividend payments.

  How this illustrates net yield: The initial return (gross dividends) is reduced by transaction costs and taxes to show the investor's real, spendable gain.

• Sale of a Manufactured Product: A small business manufactures custom furniture and sells a dining table for $2,000. This $2,000 is the gross revenue from that sale. However, the business incurred costs to produce the table, including the price of wood, fabric, labor for the craftsperson, electricity for the workshop, marketing expenses to attract the customer, and shipping costs to deliver the table. The net yield from that specific sale is the profit remaining after all these production, marketing, and delivery costs are deducted from the $2,000 sale price.

  How this illustrates net yield: The total revenue from the sale is reduced by all direct and indirect costs associated with creating and selling the product, revealing the actual profit margin for the business.