Yield on Cost Calculator

What is yield on cost?

Yield on cost tells you the real return your original investment is earning today — not what a new buyer would get. It is the dividend yield based on the price you paid, not the current market price.

For example, if you bought a stock at $50 and it now pays $3 a year in dividends, your yield on cost is 6% — regardless of what the stock is worth today. A new buyer paying $100 for the same $3 dividend would only get a 3% yield, but your original dollars are earning 6%.

Why it matters

Yield on cost shows how well your original investment is working for you. As a company raises its dividend over the years, your yield on cost rises even though the market yield stays similar. It is a measure of real income growth — not just price appreciation.

Yield on cost vs. dividend yield

Dividend yield uses the current share price: annual dividend ÷ current price × 100. Yield on cost uses your purchase price: annual dividend ÷ your purchase price × 100. A stock trading at $100 with a $4 dividend yields 4% for a new buyer, but if you bought it at $50, your yield on cost is 8% — your original dollars are earning twice as much.

Worked example

Suppose you bought 100 shares of a stock at $50 each ($5,000 total) and it now pays $3 a year in dividends.

1. Annual dividend per share: $3.00
2. Divide by your purchase price: $3.00 ÷ $50 = 0.06
3. Convert to a percentage: 0.06 × 100 = 6%

So your yield on cost is 6%. Your $5,000 investment now generates 100 × $3 = $300 a year in dividends — a 6% return on your original money. If the stock now trades at $100, the current dividend yield is only 3%, but your original dollars are earning 6%.

What your result means

Yield on cost helps you see the real return your original investment is generating. A rising yield on cost means your income is growing — a sign of a successful dividend investment. A yield on cost well above the current dividend yield means your original dollars are working much harder than a new buyer’s would be.