How to use this calculator
- Your cost: enter your average cost per share, or the total you paid and how many shares you own.
- Current annual dividend: what one share pays now over a full year.
- Compare with today’s price: turn on to see the regular yield a new buyer would get.
- Project a future yield on cost: turn on and enter a growth rate and number of years to see where your yield on cost could go.
The formula
Cost per share = Total amount paid ÷ Shares
Yield on cost = Annual dividend per share ÷ Cost per share × 100
Current yield = Annual dividend per share ÷ Current price × 100
Future dividend = Annual dividend × (1 + Growth rate)^Years
Future yield on cost = Future dividend ÷ Cost per share × 100
Your cost per share stays fixed once you’ve bought, unless you buy more. The dividend can grow, so yield on cost rises over time when a company keeps raising its payout. The growth rate is your assumption, applied once a year.
Worked example
These are the numbers already in the calculator. You bought shares at $35.00 each (for example, $7,000 for 200 shares). The stock now pays $2.10 a year and trades at $60.00.
- Yield on cost: $2.10 ÷ $35.00 × 100 = 6.00%.
- Current yield: $2.10 ÷ $60.00 × 100 = 3.50%.
- Dividend in 10 years at 6% growth: $2.10 × 1.0610 = $3.76.
- Future yield on cost: $3.76 ÷ $35.00 × 100 = 10.75%.
So your original money earns 6.00% a year today, while a new buyer at $60.00 would earn 3.50%. If the dividend keeps growing at 6%, your yield on cost reaches about 10.75% in 10 years.
Why yield on cost is a personal number
Yield on cost depends on when you bought. Someone who bought the same stock ten years earlier at a lower price has a higher yield on cost; someone who bought last week has a yield on cost equal to the current yield. The company and its dividend are the same for all of them.
That makes it a good way to see how a growing dividend has rewarded patience. It is less useful for deciding what to do next. Your shares could be sold today at today’s price, and that money would earn the current yield wherever you put it. Comparing current yields, dividend growth and risk tells you more about the choice in front of you than the price you paid years ago.
Tip: if you reinvest dividends, update your average cost from your broker now and then. Each reinvestment buys at a different price, and your yield on cost moves with it.
When you bought in several lots
Most people don’t buy all their shares at once. Say you bought 100 shares at $30 and later 100 more at $40. Your total cost is $7,000 for 200 shares, so your average cost is $35, and that is the number to use here. Choose “Total + shares” and enter the totals if that’s easier than working out the average yourself.
You can also check each lot on its own. The early lot has a higher yield on cost than the later one, which is a useful reminder of how much the starting price matters for income.
Yield on cost and inflation
A rising yield on cost is in today’s dollars only if the dividend grows faster than prices in general. A dividend that grows 3% a year when inflation is also 3% looks better and better on paper but buys about the same each year. Compare your dividend growth rate with inflation to see whether your income is really growing.
To project the dividend itself, or to find how fast it has grown in the past, use the Dividend Growth Calculator. For the regular yield at any price, use the Dividend Yield Calculator.