## How Is Yield on Cost Calculated?

When you calculate yield on cost (YOC), you’re measuring a stock’s dividend yield based on the price you originally paid for it.

To calculate yield on cost, enter:

• your per-share purchase price
• the annual dividend.
• dividend of the trailing twelve months or an estimate of the next twelve months’ dividend.

## Example of Yield on Cost Calculation

For example, you buy shares of Company XYZ for \$10 and XYZ pays a \$0.10 dividend per share for each of the last 12 months.

You would enter:

• “10” as the purchase price
• “1.20” as the annual dividend amount (0.10 x 12 = 1.20).
• If the dividend is predicted to increase to \$0.20 per month for the next 12 months, you would enter “2.40” as the dividend amount.

Your yield on cost would be 12.00%.

Note: If you’d like to compare yield on cost to the current yield, enter the current price as well (this is optional).

## What Yield on Cost Is Important

Yield on cost is highly relevant to individual investors, but it’s often overlooked in favor of current dividend yield. A company that is able to consistently grow its dividends could be a great investment for individual investors who want to see their yield on cost increase as their dividend payout grows.