Yield Advantage

Yield Advantage - A yield advantage is an extra amount of return that an investor will earn if he or she buys convertible securities of a certain company. This is compared to the common stock of that company. A yield is an annual rate of return on an investment, which is higher on convertible securities, compared to the common stock. Deduct from that the dividend yield to calculate the yield advantage. This advantage can vary every year, depending on the dividend rate that the company decides to pay out. Convertible stock however can be changed at the option of the holder for common stock.