TTM Yield: How to Calculate Trailing 12 Months Yield, Simplified & Updated!

ttm yield

Have you ever looked into a mutual fund and discovered the TTM Yield? When an investor wants to know the yield of specific investment security, such as a stock, bond, mutual fund, or ETF, they may look up the trailing twelve-month yield, abbreviated as TTM Yield. But what does this mean, and how does it benefit investors?
This is your chance to learn what a trailing 12-month yield is and how to use it. We’ll also see the TTM yield vs 30-day sec yield, the one that gives a better report.

What Exactly Is Trailing 12 Months? (TTM)

The phrase “trailing 12 months” (TTM) refers to the previous 12 consecutive months of a company’s performance results. Financial analysts use it for reporting financial figures. The 12 months under study do not always correspond to the end of a fiscal year.

TTM Yield Fundamentals

Analysts use a TTM to dissect a wide range of financial data. These financial data include balance sheet estimates, income statements, and cash flows. The process for measuring TTM data varies from financial statement to financial statement.

Some stock research analysts report earnings quarterly, while others report them annually. TTMs, on the other hand, could be more applicable to investors seeking regular information about stock prices and other current data. This is because they are more current and one can adjust it seasonally.

One can also calculate financial ratios using TTM statistics. We can determine the price/earnings ratio by dividing a company’s trailing 12-month earnings per share by its current stock price (EPS).

Most fundamental analysis entails comparing a calculation to a similar measurement from a previous term. This is to determine the extent of the growth. For example, while a company reporting $1 billion in sales is undeniably remarkable. This accomplishment is even more impressive if the same company’s revenues rose from $500 million to $1 billion over the last year. This significant change gives a good picture of the company’s growth trajectory.

Where Will I Find the TTM?

They usually publish the 12-month calculation on a company’s balance sheet. They typically revise it quarterly to comply with commonly accepted accounting principles (GAAP). However, some analysts take an average of the first and last quarters.

The cash flow statement’s line items (for example, working capital, capital expenses, and dividend payments) should be handled in accordance with the feeding financial statement. Working capital, for example, comprises averaged balance sheet line items. Depreciation, on the other hand, is deducted from profits on a quarterly basis. So, analysts examine the past four quarters as they state it on the income statement.

What is TTM Yield?

A trailing twelve-month yield (TTM Yield) is the amount of income the investors earn from a fund portfolio over the previous year. The TTM is an acronym that stands for “trailing twelve months”. We determine it by taking the weighted average of the yields of the mutual fund or ETF portfolio’s holdings (e.g., stocks, bonds, or other mutual funds).

In contrast, we determine the yield on a fund’s underlying stock assets by dividing the total dollar sum of dividends paid out as profits to shareholders by the share price of the stock.

How to Examine the TTM Yield of a Mutual Fund

The TTM Yield shows the most recent history of a mutual fund’s dividend and interest payouts to investors. For example, if you’re looking at a fund and see that the TTM Yield is 3.00 percent. It will have paid out $3,000 to an investor who had $100,000 invested in the mutual fund the previous year. However, it is important to remember that the TTM Yield should be regarded as an estimation since it does not accurately reflect the income earned by a specific investor.

Furthermore, as with past fund results, income paid out by a mutual fund in the previous year is no guarantee that it will generate the same sum in the coming year. Hence, most times, the SEC Yield is a better way to predict a mutual fund’s potential yield than the TTM Yield. This yield is more recent. It may provide more detail and a better image of what yield to expect in the near future.

Here are three TTM measures.

TTM can be used with a lot of different kinds of financial data. Let’s look at how TTM is used to calculate revenue, yield, and the P/E ratio.

  • TTM revenue: The total amount of money a company made in the last 12 months. This could be interest income and other fees for a bank, or it could be net sales for a company that makes or sells things. A TTM revenue measure gives a more accurate picture of the company’s recent performance than its last annual or quarterly revenue report, which could be months old.
  • TTM Yield: TTM yield is a way to figure out how much money a mutual fund or exchange-traded fund (ETF) has given back to investors over the past 12 months. The TTM yield of a fund is found by taking the weighted average of the yields of the assets in its portfolio.
  • TTM earnings price ratio: This measures a company’s P/E ratio over the past 12 months. It is also called “trailing P/E.” It is found by dividing the current stock price by the last four quarters’ earnings per share (EPS). By looking at a stock’s trailing P/E, investors can get a sense of how expensive or cheap it is compared to how much it could make in the future.

TTM and the Financial Reporting of Corporations

The TTM format is an important tool for companies doing financial planning because it uses the most up-to-date financial information. TTM is especially helpful for figuring out things like working capital, revenue growth, and profit margins, which can change based on the time of year.

TTM metrics give managers a quick look at how well a company is doing financially. By looking at the last 12 months on average, you can get a better idea of how a company’s finances are doing at any given time. This is because seasonality, temporary volatility, and one-time charges are taken out of the picture.

Bond Fund Yields: What to Expect

ttm yield vs 30 day sec yield, trailing twelve months

In recent years, bond fund interest and stock fund dividends have been relatively modest. Consequently, it is likely that interest rates and bond yields will rise from their historic lows in the long run. Yields rose in 2018, but then leveled off and fell marginally in 2019.

What Is the 30-Day Sec Yield?

The 30-Day SEC Yield of a mutual fund is a measure based on the 30 days ending on the last day of the previous month. After deducting the fund’s expenditures, the yield figure represents the dividends and interest received during the era. The yield is named after the Securities and Exchange Commission since it is the yield that businesses are to disclose to the SEC.

The SEC yield figure for bond funds approximates the yield an investor will earn in a year if each bond in the portfolio were held until maturity. However, bond fund assets (the underlying bond securities) are not held to maturity, and bond funds do not “mature.”

The 30-Day SEC Yield, on the other hand, is still useful information for investors. This is because it helps estimate revenue, expressed as a percentage, required for planning purposes. So let’s look at TTM yield vs 30-day sec yield.

TTM Yield vs 30-Day SEC Yield

The primary difference between a mutual fund’s TTM Yield and its 30-Day SEC Yield is that the latter is a more recent indicator of yield. Neither figure is a reliable indicator of a fund’s future income-generating capacity.

The dividend, interest, and distribution history of a mutual fund will better project the trajectory of interest rates and guide expectations. For example, if the TTM Yield is more than the 30-Day SEC Yield, the combined data show that the fund’s future yield will fall further. We can also see this data in conjunction with current interest rates and the overall state of the economy.

As the Federal Reserve lowers interest rates, the yields on stocks, bonds, and mutual funds that hold these securities fall. For example, if the TTM Yield is 3.99 percent and the 30-Day SEC Yield is 2.99 percent, you can expect the fund’s yield to fall below 2.99 percent in the coming months and years. Only remember to be optimistic in your projections and never expect prices to rise in the short term.

The reverse is also usually true: as the Fed raises interest rates, bond yields appear to increase as well. In this environment, an investor could anticipate an increase in the SEC Yield on a bond fund. However, investors should be aware that bond fund prices appear to fall or have returns that fall below historical norms.

TTM Revenue

Trailing 12 Months Revenue is the revenue earned by a corporation over the previous 12 months (TTM). This information is useful in assessing whether or not an organization has experienced significant top-line growth. It can also pinpoint the source of that growth. This statistic, however, is often overshadowed by a company’s profitability and ability to generate earnings before interest, tax, depreciation, and amortization (EBITDA).

Summary

The yield on bond funds is derived from interest payments. Investors involved in mutual fund yields are usually those seeking returns from their portfolios.

What yield is the best to analyze if you are an income investor looking at a mutual fund’s TTM Yield and its 30-Day SEC Yield? Or do you take into account all yields? Investors searching for income should learn the fundamentals of measuring a mutual fund’s yield. In summary, the TTM Yield represents yield over the previous year, while the 30-Day SEC Yield represents the most recent yield (as of the last 30 days).

Businessyield does not provide tax, savings, or financial advice. The information is provided without regard for any particular investor’s investment goals, risk tolerance, or financial circumstances, and may not be appropriate for all investors. Past success is not a predictor of potential outcomes. Investing entails risk, including the possibility of losing principal.

TTM yield FAQs

What is TTM yield vs SEC yield?

In summary, the TTM Yield shows yield over the past year, and the 30-Day SEC Yield shows the most current yield (as of the last 30 days).

What TTM means?

Trailing 12-month, or TTM, refers to the past 12 consecutive months of a company’s performance data used for reporting financial figures.

How is TTM return calculated?

A TTM dividend yield is calculated by adding up the dividend from the last four quarters, then dividing by the current stock price. For example, let’s say a company’s stock price is $100 per share, and they paid $0.50 in dividends in each of the last four quarters

  1. MUTUAL FUNDS UPDATED: 15+ Best Mutual Funds in 2021 (+ Detailed Beginners’ Guide)
  2. HEDGE FUNDS VS MUTUAL FUNDS: 7 key Difference You must know
  3. Understanding Yield Curve with Ease (Detailed Explanation)
  4. Yield Curve Theories
  5. Yield: Definition, Meaning, Types and How to Calculate Yield
0 Shares:
Leave a Reply

Your email address will not be published.

You May Also Like