Free Tool
Yield on Cost Calculator
See how your dividend yield on cost grows year by year as the dividend compounds. Free, browser-based, no signup required.
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Starting yield3.00%
Yield on cost after 20 years10.85%
Final-year income$542.48
Cumulative dividends over 20 years$6,149.32
| Year | Dividend / share | Yield on cost | Annual income | Cumulative income |
|---|---|---|---|---|
| 1 | $1.50 | 3.00% | $150.00 | $150.00 |
| 5 | $1.97 | 3.93% | $196.62 | $862.61 |
| 10 | $2.76 | 5.52% | $275.77 | $2,072.47 |
| 15 | $3.87 | 7.74% | $386.78 | $3,769.35 |
| 20 | $5.42 | 10.85% | $542.48 | $6,149.32 |
Yield on cost (YOC)is your current annual dividend divided by the price you originally paid. Unlike current yield — which uses today's share price — YOC rises over time as the company raises its dividend and your cost basis stays fixed. It is the single most honest measure of how your income has grown relative to your original investment.
The YOC formula
Yield on Cost = Current annual dividend per share ÷ Original cost basis per share
If you bought shares at $50 and the company now pays $4.00 per share annually, your yield on cost is 8%. A new buyer paying today's market price of $80 sees a current yield of only 5%, but your personal return as an owner is 8%.
Why YOC matters for dividend investors
Current yield tells you what new buyers get today. YOC tells you whatyou are actually earning on capital you put to work years ago. For long-term dividend investors, YOC is the more meaningful number. Three specific reasons:
- YOC captures compounding in plain English.A 3% starting yield that grows at 7% per year turns into an 8% YOC in year 15 — something the headline “yield” number never shows because price usually tracks dividend growth.
- YOC makes dividend growth visible.If you bought Johnson & Johnson at $60 ten years ago, your YOC today is meaningfully higher than JNJ's current yield — the growth of the dividend is locked into your return even as market dynamics move the price.
- YOC is why patient capital wins.Sell a position and rebuy at today's price and you lose the YOC advantage. Dividend Aristocrat portfolios that sit untouched for 20+ years often produce 15%+ YOC with minimal effort.
How to use this calculator
- Enter your cost basis— the price you actually paid per share, not today's price.
- Enter shares owned — the calculator uses this for annual and cumulative income.
- Enter the current dividend yield— use the TTM yield based on today's share price (or compute it as annual dividend / today's price).
- Set the dividend growth rate — use the 5-year or 10-year historical growth rate, lean conservative for long projections.
- Pick a horizon — 20 years is a good default for retirement planning.
The calculator shows your YOC at years 1, 5, 10, 15, 20 (plus your custom endpoint), along with annual and cumulative income.
Yield on Cost — Frequently Asked Questions
- What is yield on cost?
- Yield on cost (YOC) is the current annual dividend divided by the price you originally paid — not the current share price. It shows how much your income has grown relative to your original investment. A stock bought at $50 now paying $4/share has a YOC of 8%, even if today's buyers see a lower current yield.
- How is yield on cost different from current dividend yield?
- Current yield uses today's share price as the denominator. Yield on cost uses your original cost basis. As dividends grow and you continue to hold, YOC rises while current yield stays relatively stable (since price tends to grow with dividends).
- What is a good yield on cost?
- It depends on your horizon. A 3% starting yield growing at 7% annually produces about 8% yield on cost after 15 years and 12% after 20 years. Most dividend-growth investors target double-digit YOC within 15-20 years of purchase.
- Does the calculator assume reinvestment?
- No. This YOC calculator isolates dividend growth only — your share count stays fixed. For reinvestment compounding (which grows share count too), use the DRIP calculator linked below. Real portfolios combine both effects.
- What growth rate should I use?
- For Dividend Aristocrats, 6-8% is the historical average. Mature utilities and telecoms: 2-4%. Fast-growers: 8-12%, but 10%+ over 20 years is rare. Check a stock's 5- or 10-year dividend growth rate and lean slightly conservative for long projections.
Related tools
- Dividend Yield Calculator— today's income from any holding
- DRIP Calculator — add dividend reinvestment to the compounding equation
- Dividend Growth Calculator — similar tool that also tracks final-year growth multiples
- FIRE Calculator — how YOC and growth feed your retirement timeline
- Free Dividend Tracker App — YOC tracked automatically on your real holdings