Free current yield calculator — divide annual coupon income by market price to measure a bond's income return and compare yields across different bonds.
Current yield is one of the simplest measures of a bond's income return. It divides the annual coupon payment by the bond's current market price to produce a percentage that lets investors quickly compare income across different bonds. Unlike yield to maturity, current yield ignores capital gains or losses at maturity and does not account for the time value of money. This makes it a fast screening metric rather than a comprehensive measure of total return.
Our Current Yield Calculator instantly converts face value, coupon rate, and market price into a percentage. It also shows the annual coupon amount, the relationship between coupon rate and current yield, and whether the bond trades at a premium, discount, or par. Use it alongside the YTM Calculator for a fuller picture of bond returns. This metric is especially useful for income-focused investors comparing bonds purchased above or below par value in the secondary market.
Current yield gives a quick snapshot of income return. If you are comparing two bonds with different coupon rates and prices, current yield distills both into a single number. Income-focused investors use it to rank bonds in a portfolio, while traders use it to spot relative value. Because the calculation is simple, it is also easy to reverse-engineer: given a target yield and coupon rate, you can solve for the price you should be willing to pay.
Current Yield = (Annual Coupon Payment / Current Market Price) × 100, where Annual Coupon Payment = Face Value × Coupon Rate.
Result: 5.26%
A $1,000 face-value bond with a 5% coupon pays $50/year. If the bond trades at $950, the current yield is $50 / $950 × 100 = 5.263%. Because the bond trades below par, the current yield exceeds the coupon rate, reflecting the higher income return on the discounted purchase price.
Current yield is one of the first formulas taught in bond analysis because of its simplicity and intuitive appeal. By relating annual coupon income to the market price, it answers the fundamental investor question: "How much income do I earn per dollar invested?" This makes current yield particularly relevant for retirees and institutions that depend on coupon cash flows.
When a bond trades at a premium (price above face value), the current yield falls below the coupon rate. Conversely, discount bonds (price below face) have a current yield above the coupon rate. At par, the two are identical. Understanding this relationship helps investors quickly gauge whether a bond's price implies higher or lower income than the stated coupon.
Current yield ignores the gain or loss an investor realizes at maturity. A deeply discounted bond may show a modest current yield but a much higher YTM due to the capital appreciation component. Similarly, a premium bond may sport a decent current yield but a lower YTM because the investor loses capital at par redemption. Always pair current yield with YTM and, for callable bonds, yield to call for a complete return perspective.
The coupon rate is the stated annual interest rate on the face value, while current yield adjusts for the market price. If you buy a bond below par, your current yield is higher than the coupon rate because you paid less for the same coupon income. The reverse applies for bonds purchased above par.
No. Current yield only considers annual coupon income relative to price. Yield to maturity additionally accounts for capital gain or loss at maturity and the time value of all future cash flows. YTM is a more comprehensive return metric, while current yield is a quick income snapshot.
For conventional coupon-paying bonds, current yield is always positive because both the coupon and the price are positive. However, in extremely rare negative-rate environments where coupons are negative, the result would technically be negative.
Income investors focus on the cash they receive relative to the capital invested. Current yield gives an immediate, intuitive measure of income return. It lets investors compare bonds of different coupons and maturities on a common percentage basis without complex present-value math.
For floaters, current yield changes with every coupon reset. You can still calculate it using the most recent annual coupon amount, but it is only a point-in-time snapshot and will change at the next reset date.
Current yield applies to fixed-income securities (bonds), while dividend yield applies to equities (stocks). The math is similar — income divided by price — but bonds have a maturity date and face value, which means you should also consider YTM for a complete bond analysis.