Glossary · Rates & Instruments
Current Yield
The annual income from a security divided by its current market price, expressed as a percentage. Useful for comparing income return across different fixed-income or dividend-paying securities.
01—What is Current Yield?
The definition — and what it means in practice.
Current yield is the annual income paid by a security divided by its current market price, shown as a percentage. For a bond, the “income” is typically the annual coupon payment; for a dividend-paying share, it can be the expected annual cash dividend. Because the price used is today’s market price, current yield changes as the price moves, even if the income amount stays the same.
Current yield matters because it helps you compare income return across different securities on a like-for-like basis. It is a quick screening tool, not a full return measure: it ignores capital gains or losses, reinvestment, and (for bonds) the effect of buying above or below face value. It also does not account for taxes, timing of payments, or the risk that income is reduced or skipped.
If a security pays Rs 10 a year and trades at Rs 200, its current yield is 5% (Rs 10 ÷ Rs 200).
Current Yield (%) = Annual Income ÷ Current Market Price × 100
Annual income is coupon (bonds) or expected yearly cash dividend (shares); price is the latest traded/market price.
- Current yield is income-only return based on today’s price, expressed as a percentage.
- It rises when price falls, and falls when price rises, even if income is unchanged.
- For bonds, it does not include gain/loss from buying above or below face value.
- It is useful for comparisons, but it is not the same as total return or yield to maturity.
02—How current yield works on the PSX
The Pakistan-specific rules, conventions, and numbers.
On the Pakistan Stock Exchange (PSX), retail investors most often encounter the idea of current yield when comparing dividend-paying shares. Because most listed shares have a Rs 10 face value and dividends are declared as a percentage of face value, you can translate a declared dividend into rupees per share and then relate it to the share’s current market price to estimate an income yield.
In practice, the “current” part matters on the PSX because the market price can change daily, while dividends are declared through corporate action announcements and may vary from period to period. Also note that cash dividends are subject to withholding tax in Pakistan (different rates for filers and non-filers), so an investor’s net cash yield can be lower than the headline current yield based on the gross dividend.
03—Common misconceptions
Where investors most often get this wrong.
A higher current yield always means a better investment.
Not necessarily. A high yield can result from a falling price or an unusually high past payout. It does not measure risk or future sustainability.
Current yield is the same as total return.
Total return includes price changes as well as income. Current yield only looks at income divided by today’s price.
For bonds, current yield equals yield to maturity.
Yield to maturity also reflects repayment at maturity and any premium/discount paid, plus reinvestment assumptions. Current yield is a simpler income-only ratio.
04—Using current yield on BSL
Where this term shows up across the platform — with live data.
- Review income-focused opportunities on Stocks.
- Filter dividend-paying names using the Stock Screener.
- Track dividend-related dates and announcements via Ex-Dates.
- Browse the market list for income comparisons on Highest Dividend Yield.
05—Frequently asked questions
What investors ask about current yield on the PSX.
Frequently Asked Questions
Both relate income to the current price. “Dividend yield” is usually used for shares and is based on dividends, while “current yield” is common for bonds and uses the coupon as income. The calculation idea is similar: annual income divided by current market price.
No. Current yield only measures income relative to today’s price. Any profit or loss from selling at a higher or lower price is separate and is not captured by current yield.
No. Current yield uses the current market price in the denominator. Face value can help convert a declared dividend percentage into rupees per share, but the yield itself is based on the market price.
Headline current yield is usually quoted on a gross basis. In Pakistan, cash dividends are subject to withholding tax, with different rates for filers and non-filers, so the net cash received (and net yield) can be lower.
Because the denominator is the current market price. If the share price moves up or down while the expected annual dividend stays the same, the current yield will move inversely.
06—Related terms
Keep building the picture.
Annual dividend per share divided by the current share price, expressed as a percentage. A useful metric for income-focused investors is to compare dividend yields across different stocks.
A direct payment made by a company to its shareholders, usually from profits, expressed as a rupee amount per share. Subject to withholding tax in Pakistan.
The annual interest rate payable on a bond, expressed as a percentage of its face value. A bond with a face value of PKR 1,000 and a 10% coupon rate pays PKR 100 in interest per year.
The income generated by an investment over a period, expressed as a percentage of the investment's cost or current market value. Dividend yield and bond yield are the most commonly referenced forms.
The total return an investor would earn on a bond if held until its maturity date, accounting for all coupon payments and the difference between the purchase price and face value. The most comprehensive measure of a bond's return.
The nominal value of a share as stated in a company's charter. In Pakistan, most listed companies have a face value of PKR 10 per share, though this varies. For bonds, the face value is the amount repaid at maturity.
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