In chapter 14, the concept of running yield is used several times, but not defined clearly. Besides, it used and defined in chapter 16, for property investment, as "the rental income divided by the cost of buying the property gross of all purchase expense", which is not the same as its implying concept in chapter 14. Who could advice? thanks in advance!
The running yield is the annual income from an asset or portfolio divided by its current market value. For a share, this is equal to the dividend yield. By using the market value as the denominator we obtain a reasonably objective calculation. The definition you have given is the definition for a property's rental yield. Strictly speaking it does not match the definition of running yield, since the denominator is not the market value. However, for properties, the market value is not generally observable at any given point in time. From the point of view of the property owner it may be pragmatic to refer to the rental yield as the property's running yield.
on that case, why it's said that the running yield of conventional bonds is higher than equity investment, which said in chapter 14? conmon sense, dividends yield of share is higher than interest of bond.
Don't forget that you're expecting a capital gain from shares as well as dividends. So, on the basis that shares are riskier, you might expect a higher total return from shares than bonds, but part of this comes from the capital gain so the running yield of shares is lower.
Because running yield ignores capital growth, it only considers income. So we would expect the total return on equities to be higher than bonds in the long run, but that's not the same as dividend yield being higher than interest on bonds. For example, there are some equities which pay little or no dividends (think of Apple!) so will have extremely low dividend yield, but still provide a very high overall return because of increasing share prices.
