Yield-on-Cost Calculator
Project the rising yield on your original investment.
Yield-on-cost (YOC) measures how your effective dividend yield grows as a company raises its payout — even though the current yield on the share price might look low today. Model how a steady dividend growth rate compounds your YOC over time.
Your inputs
Enter your cost basis, starting yield, and growth assumption.
Understanding yield-on-cost
Yield-on-cost (YOC) divides today’s annual dividend by the price you originally paid for the shares — not the current market price. It’s the metric that turns a quiet 3% starter yield into a 10%+ effective yield two decades later, as long as the company keeps raising its dividend. Dividend growth investors track YOC because it reflects what their own capital is doing, independent of stock price moves.
The calculator compounds the starting dividend by your assumed annual growth rate for the full holding period, then divides each year’s payout by your original cost. The final YOC is the headline number; the lifetime total tells you how much cash the position threw off along the way.
A note on the convention. Year 1 pays the starting dividend, so the “final year” payout reflects N−1 compounding steps from year 1, not N. For example, a 4% starting yield growing 10% per year over 10 years lands at 4% × 1.109 ≈ 9.43% — not 4% × 1.1010 ≈ 10.37%.
How to use it
- Initial investment. What you paid for the position. This is the denominator that stays constant for the YOC calculation.
- Starting dividend yield. The annual dividend divided by your purchase price — not necessarily today’s market yield if you bought a while ago.
- Annual dividend growth rate. The average rate the company raises its dividend each year. Dividend Aristocrats have raised for 25+ years; their median 10-year growth rate is roughly 6–9%.
- Holding period. How long you plan to hold. YOC compounding is back-loaded — the magic shows up in years 15+.
Common questions
Is YOC a useful comparison metric? Only against your own positions or another scenario for the same stock. Comparing YOC across stocks bought at different times mostly tells you who bought earliest, not which company is currently the better investment.
Does this account for dividend reinvestment? No. YOC tracks the yield on your original capital. If you reinvest dividends, your cost basis and share count grow, and the DRIP calculator is the right tool.
What growth rate is realistic? Mature Aristocrats raise 5–8% annually. Faster growers (early-stage dividend payers) can run 10–15% but with more risk of a cut. Use the rolling 5- or 10-year growth rate on the stock’s fact sheet as a starting point.
Take it further with Dividend Vision
- Read Dividend Aristocrats: Surprising Truths to see real-world dividend growth track records.
- Translate YOC into actual income with the dividend income calculator.
- Layer reinvestment on top with the DRIP calculator.
- Build a long-term plan around growing income with the retirement calculator.