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Yield-on-Cost Calculator
Income Yield on My Cost (yield-on-cost) is the current annual payout divided by your cost basis. It does not include price gain/loss and is not the same as today’s forward distribution rate. Model how a steady dividend growth rate compounds that figure over time.
Your inputs
Enter Cost Basis (total paid), starting yield, and growth assumption.
Income growth over time
Projected annual income and cumulative dividends each year — the payback point is where cumulative dividends cross your original investment.
View yearly projection
| Year | Annual income | Income Yield on My Cost | Cumulative dividends | Cost recovered |
|---|
Assumptions used
- Year 1 pays the starting dividend; each later year grows by the dividend growth rate, so the final year reflects N−1 raises.
- The cost basis stays fixed at your original investment — no reinvestment and no additional purchases (use the DRIP calculator to model reinvesting).
- The dividend is never cut and grows at a constant rate every year.
- Taxes, fees, and inflation are excluded; results are in nominal dollars.
- The payback point counts dividends only — it ignores the position’s remaining market value.
Understanding yield-on-cost
Income Yield on My Cost (yield-on-cost) divides today’s annual payout by the cost basis you paid — not the current market price. It does not include price gain/loss. 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
- Learn: Yield-on-Cost → — the full explainer on how rising dividends lift the yield on your original cost.
- 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.