Calculator Panel
Calculation Ready
Enter your values above and click Calculate.
What This Calculator Does
This calculator displays your actual personal yield on cost (YOC) as dividends grow, illustrating how long-term holding expands your cash flow returns.
How to Use This Calculator
Enter your initial share purchase price and the current annual dividend per share, then click Calculate.
How the Calculation Works
The underlying math engine processes your inputs using exact formulas. This systematic approach ensures professional, institutional-grade calculation precision:
Mathematical Formula
Formula Legend:
- · Current Annual Dividend Per Share = The cash dividend paid out currently over one year.
- · Original Purchase Price = The price you paid per share when you initially bought the stock.
Practical Example
Suppose you bought shares of a company 10 years ago at $25.00 per share. Today, the stock trades at $100.00 and pays an annual dividend of $2.00 per share:
Step-by-Step Mathematical Walkthrough:
- 1 Identify original purchase price: $25.00 per share.
- 2 Identify current annual dividend: $2.00 per share.
- 3 Calculate Yield on Cost: ($2.00 / $25.00) * 100 = 8.00%.
- 4 Note: The current market dividend yield is only 2.00% ($2.00 / $100.00).
Important Assumptions & Notes
- Does not include adjustments for subsequent share purchases at different prices.
- Does not factor in transaction commissions or dividend taxes.
Common Mistakes or Considerations
- Using yield on cost to evaluate whether to sell a stock (current yield and opportunity cost are more relevant for current decisions).
- Confusing yield on cost with current dividend yield.
Frequently Asked Questions
What is Yield on Cost (YOC)?
Yield on cost is the annual dividend rate of a stock divided by the price you originally paid for it, showing your personal return on initial capital.
Why does Yield on Cost increase over time?
YOC increases as a company raises its annual dividend payout, while your original purchase cost remains a fixed historical number.
Is YOC a good measure of investment performance?
Yes, it shows the efficiency of your initial investment. However, for active decision making, current dividend yield is often preferred.
Can Yield on Cost be greater than 100%?
Yes. If you buy a stock at $2.00 and years later its annual dividend grows to $3.00, your Yield on Cost is 150%.