Dividend Calculator logodividendcalculator.app

Yield on Cost Calculator

What your original dollars earn now, and where growth takes it

Cost and dividend
Compare the income on your cost with the yield available today.
$
$
$
%
Yield on cost
4.50%

Your yield on cost is 4.50% versus a 3.00% current yield for a buyer today.

Projection

YearDividend per shareYield on cost
1$1.914.77%
2$2.025.06%
3$2.145.36%
4$2.275.68%
5$2.416.02%
6$2.556.38%
7$2.716.77%
8$2.877.17%
9$3.047.60%
10$3.228.06%
11$3.428.54%
12$3.629.05%
13$3.849.60%
14$4.0710.17%
15$4.3110.78%
16$4.5711.43%
17$4.8512.12%
18$5.1412.84%
19$5.4513.62%
20$5.7714.43%

What yield on cost measures

Yield on cost is this year's dividend per share divided by what you paid per share rather than what the stock trades at today. Buy at $40, collect $1.80 a year, and your yield on cost is 4.5% even if the market now prices the stock to yield 3%. The market's yield describes a purchase you could make today; yield on cost describes the one you already made.

The number only becomes interesting with time. Each dividend raise lifts it while your cost stays frozen, which is how long-held dividend growers end up paying double-digit percentages on their original purchase price.

The projection

Give the calculator a dividend growth rate and it compounds the payout forward: a 4.5% yield on cost growing 6% a year passes 8% around year 10 and 10% around year 14. That is the quiet argument for holding through boring years. The income curve bends late, and the table shows exactly when.

What yield on cost does not tell you

  • It is not a reason, by itself, to keep a stock. Capital moved to a better business earns what the better business pays; your old cost basis is history, not strategy.
  • It ignores what the shares are worth now. A 12% yield on cost on a stock that lost half its value is not a win.
  • It assumes the dividend keeps growing. A cut resets the numerator instantly, and no cost basis protects you from that.
  • Taxes still apply to the income like any other dividend. Yield on cost is a pre-tax bragging number.

Reinvestment blurs the math

Reinvested dividends buy new shares at new prices, each with its own cost basis, so a strict yield on cost drifts as you DRIP. This calculator models a single purchase held as-is; for the full reinvestment picture, month by month, use the DRIP calculator on the home page.

Common questions

How is yield on cost different from dividend yield?

Dividend yield divides the payout by today's price; yield on cost divides it by your price. The first tells a buyer what they would get, the second tells an owner what they are getting. They are equal only at the moment you buy.

Is a high yield on cost a reason to hold a stock?

Not by itself. The money you have tied up is worth its market value today, and it earns whatever that value yields wherever you put it. Yield on cost is a fine scorecard for a past decision and a bad compass for the next one.

How fast does yield on cost grow?

At the dividend growth rate, compounded. A 3% starting yield growing 8% a year is a 6.5% yield on cost after ten years and a 14% one after twenty. The projection table above shows the exact path for your numbers.