Tools/ Dividends
Yield on Cost Calculator
Dividend yield tells a new buyer what their money would earn today. Yield on cost tells you what the money you already committed is earning now. Enter the dividend and the price you actually paid, add a second purchase if you built the position in pieces, and see both numbers at once. No sign-up, and the calculation runs entirely in your browser on the numbers you type.
Yield on cost
4.50%
Your position pays $180.00 a year on $4,000.00 invested. A new buyer at the current price gets 3.00%. The gap between the two numbers is the record of your entry price and every dividend raise since.
Pre-filled with the worked example from this page (dividend $1.80, cost $40.00, 100 shares) so the mechanics are visible before you type. Add a second purchase to see the multi-lot position figure. Educational tool, not financial advice. Yield on cost describes income on your original capital; it says nothing about whether the stock is worth holding today.
How it works
The formula is one line: the current annual dividend per share divided by your cost per share. The numerator is today's dividend, not the dividend at purchase, which is what makes the number move over time: every raise lifts it, every cut drops it, and market price swings never touch it.
Most real positions were built in pieces, at several prices. For those, the honest position figure is total annual income divided by total cost, which is the same as the dividend divided by the share-weighted average cost. Lot by lot figures are still worth seeing, because they show which purchase actually earned its place. This calculator reports the blend and the lots together, the same per-lot arithmetic FullPort runs on tracked holdings.
A worked example
Buy at $40 per share with a dividend of $1.20, and your yield on cost starts at 3.0%, the same as the current yield on the day you buy. Years later the dividend has risen to $1.80 and the stock trades at $60. Your yield on cost is now 4.5%, while a new buyer at $60 gets 3.0%. On 100 shares, your position pays $180 a year on the $4,000 you committed.
Add a second purchase of 100 shares at $50 and the position blends: $9,000 of cost for 200 shares, an average cost of $45, a position yield on cost of 4.0%, and $360 a year of income. The lots underneath sit at 4.5% and 3.6% respectively. A calculator that takes only one purchase price forces you to do that averaging by hand; this one does not.
One projection, labeled as an assumption rather than a promise: had the original $1.20 dividend grown at 8% a year for ten years against the $40 cost, the yield on cost would reach 6.48%. The number is only ever as good as the growth rate fed into it.
Where yield on cost misleads
- It ignores opportunity cost.The question that matters today is whether the position's current value is well deployed against your alternatives. Yield on cost cannot answer that, and used carelessly it becomes an argument for never selling anything.
- It depends on the dividend surviving.The numerator is declared at the company's discretion and can be cut at any board meeting. A cut rewrites your yield on cost overnight.
- It ignores price appreciation entirely. A position can carry a splendid yield on cost while its total value stagnates for a decade, and a modest yield on cost can sit on your best total performer. Income on original capital is one lens, not the portrait.
- Reinvestment quietly breaks the single-price picture. Every reinvested dividend is a new small lot at that day's price. A long-running plan produces a blended yield on cost that only lot-level records compute correctly, which is one reason the paired reinvestment projection below matters.
Frequently asked questions
What is yield on cost?
Yield on cost is the current annual dividend per share divided by the price you originally paid per share. Dividend yield divides the same dividend by today's market price and describes a new buyer's income. Yield on cost describes the income your own committed capital now produces, which is why two holders of the same stock can have very different yields on cost on the same day.
How is yield on cost calculated?
One line: annual dividend per share divided by your cost per share, times 100. A $1.80 dividend on a $40 cost is a 4.5 percent yield on cost. With several purchases at different prices, use your share-weighted average cost for a position-level figure, or run each lot separately for the precise picture. This calculator does both.
What if I bought at several different prices?
Fill in the optional second purchase fields and the calculator blends the lots: total income over total cost, which equals the dividend divided by the share-weighted average cost. In the worked example, 100 shares at $40 and 100 at $50 with a $1.80 dividend give an average cost of $45, a position yield on cost of 4.0 percent, and lot yields of 4.5 percent and 3.6 percent.
Does yield on cost account for dividend growth?
It reflects growth after the fact. Every dividend increase raises your yield on cost because the numerator grows while your cost stays fixed; every cut lowers it the same way. It does not predict growth. A related projection, compounding the dividend at an assumed rate against your fixed cost, is a scenario, not a forecast, and should be labeled with the rate assumed.
Is a high yield on cost a reason to keep holding a stock?
Not by itself. A high yield on cost is a record of a good entry and patient holding. It says nothing about the company's current health or whether the position's current value is well deployed against your alternatives. Hold and sell decisions need today's facts; valuation work on today's numbers, like the Graham Number or a reverse DCF, answers that different question.
See it on every holding you own
Inside FullPort, yield on cost is computed per lot across your whole portfolio, next to your estimated annual income and your reinvestment history, and it updates when a dividend changes instead of when you remember to check.
Start freeFree to use. No credit card required.
Reinvestment is where yield on cost quietly compounds: the dividend reinvestment calculator projects it year by year, and the paired explainer, Yield on Cost Calculator: The Dividend Yield on What You Actually Paid, walks through the method end to end. For the valuation side of the same holding, the Reverse DCF calculator reads the growth rate hiding in today's price.