What Is Portfolio Yield?

To best follow today’s Juice, please see the one where we defined and illustrated dividend yield. 

In case you’re new or haven’t noticed, we like to stop down from time to time and review basic-to-intermediate investing terms. Things it helps to know as you, say, plan for retirement. 

We’re in the middle of building a retirement-focused portfolio of stocks and ETFs. To see how we have come to where we are, check out our two most recent installments that focused on portfolio creation:

5 Stocks And ETFs For A Diversified Retirement Portfolio

Building A Diversified Retirement Portfolio With Stocks And ETFs

Here’s where we are with our now eight-position portfolio with price and value information current as of the end of last week. 

So, our allocations are looking good. As we add positions (just a few more) and as portfolio drift occurs (another term we’ll define in a future Juice), we’ll rebalance. 

But today, just a quick primer on portfolio yield. 

It’s pretty obvious. Portfolio yield is the weighted dividend yield of all of your positions. Because each position size is different you can’t simply take the average of your total yield. You have to account for the different weights of each position.

This isn’t easy to do by hand or in your head. It’s only slightly easier (less difficult!) in a spreadsheet. Thankfully, there are calculators out there you can use to come up with portfolio yield. However, they’re not as common as other types of personal finance and investing calculators. 

Therefore, you generally need to be skilled at Excel or another spreadsheet program. If you use a solid brokerage platform, they will either calculate total portfolio yield for you (which is easiest) or, at the very least, show you current and anticipated dividend income monthly, quarterly and annually across your positions. 

With the latter option, you simply take the total dividend income you received or expect to receive over a given period and divide it by the dollar value of your portfolio. Move the decimal point of your result over two places to the right and you have a nice estimate of your portfolio’s total dividend yield at that moment in time. 

The longer the time frame you use, the more dividend payments you’ll account for and the better handle you’ll get on your overall, near- and slightly longer-term yield.  

So, if you expect to receive $10.00 in dividend income during a quarter on a portfolio value of $10,000, your total portfolio yield is 0.1%. If it’s $30.00 over a year on that same $10,000, it’s 0.3%. 

As we start collecting dividends on our positions, we’ll reinvest them and start to list our portfolio yield. At this point, it’s too early in the process to do so given that we haven’t yet received dividend income from these mock positions. 

If nothing else, having at least a rough estimate of your portfolio yield helps you see exactly how much money you need invested — and at what level of yield —  before you can start to think about the tough task of living off of your dividend income. 

The Bottom Line: We enjoy building portfolios like this. Let us know if you get some benefit from following along by using the feedback link at the bottom of this page. 

We think it helps bring to life our big themes of retirement and diversification for 2024 at the same time as helping define key investing terms and generate stock and ETF ideas. It just so happens that each of our positions pay dividends. The next time we add to our portfolio, we’ll go with some growth stocks that are not dividend payers to help balance (diversify) things out.

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