Yield on cost: your dividend measured against what you paid
Yield on cost (YOC): A year of dividends divided by what you paid per share, not today’s price. Bought at $40 and now paying $2.40 a year, a stock has a 6% yield on cost, even if at today’s $60 price it yields 4%.
The formula
Yield on cost = Yearly dividend per share ÷ Your cost per share × 100
It is the same calculation as dividend yield, with one change: your purchase price replaces today’s share price. Your cost per share is the average you paid, the number your broker shows as “average cost” or “cost basis per share”.
Example
You bought a stock at $40.00 a share. It now pays $2.40 a year and trades at $60.00.
- Yield on cost: $2.40 ÷ $40.00 = 6.00%
- Today’s yield: $2.40 ÷ $60.00 = 4.00%
Both are right; they answer different questions. Yield on cost says what your own money earns. Today’s yield says what a new buyer would earn.
How it grows
Your cost never changes, so every dividend raise lifts your yield on cost. If the dividend grows 6% a year for 10 years, $2.40 becomes $4.30, and your yield on cost reaches 10.75%, while a new buyer’s yield depends on the price at that time.
What it doesn’t tell you
A high yield on cost doesn’t mean the shares are a good place for new money today. Selling and buying something else is judged on today’s price and today’s yield, because that is what the shares are worth now. Use yield on cost to track how your income has grown, and dividend yield to compare choices.
To see how fast a dividend has grown, use the Dividend Growth Calculator.
Try it with your numbers
Yield on Cost Calculator Your dividend as a yield on what you originally paid.Related terms
Plain definitions for learning, not financial or tax advice. Reviewed Saturday, October 10, 2026. All dividend terms