Distribution Yield

A measure of the cash distributions paid by a fund over a given period, expressed as a percentage of the fund's current share price.

Distribution yield is a metric used to evaluate the income-generating capacity of exchange-traded funds (ETFs), mutual funds, or real estate investment trusts (REITs). It measures the total cash distributions paid out by a fund over a specific timeframe—typically the trailing 12 months—relative to the fund's current market price per share. To calculate the distribution yield, an investor sums all distributions paid per share over the past year and divides that total by the fund's current share price. Unlike a standard stock dividend yield, which only counts regular corporate dividends, a fund's distribution yield can include a mix of dividends, interest payments, realized capital gains, and return of capital. For income-focused investors, this yield helps compare the cash-flow potential of different multi-asset, equity, or fixed-income funds. However, a high distribution yield can sometimes be misleading. If a fund is paying out capital gains from one-time asset sales or returning investors' own capital to maintain a high payout, the yield may not be sustainable and can erode the fund's underlying net asset value over time.

An income ETF has a current share price of $50.00. Over the past 12 months, it paid out four quarterly distributions of $0.45, $0.50, $0.40, and $0.65 per share, totaling $2.00. Its distribution yield is calculated as $2.00 / $50.00 = 0.04, or 4.00%.