Yield on Cost Calculator
You want to know how your yield on cost and income will grow if you bought 100 shares of a $169 stock for a total investment cost of $16900. Your stock started with a 0.59% yield and has an annual dividend growth rate of 14%. You plan to hold this investment for 25 years.
Without
Reinvestment
Year Income Yield on Cost 1 $99.71 0.59 2 $113.67 0.67 3 $129.58 0.77 4 $147.72 0.87 5 $168.41 1.00 6 $191.98 1.14 7 $218.86 1.30 8 $249.50 1.48 9 $284.43 1.68 10 $324.25 1.92 11 $369.65 2.19 12 $421.40 2.49 13 $480.39 2.84 14 $547.65 3.24 15 $624.32 3.69 16 $711.72 4.21 17 $811.37 4.80 18 $924.96 5.47 19 $1054.45 6.24 20 $1202.07 7.11 21 $1370.36 8.11 22 $1562.21 9.24 23 $1780.92 10.54 24 $2030.25 12.01 25 $2314.49 13.70 With
Reinvestment
Year Income Yield on Cost Holdings Value 1 $99.71 0.59 $16999.71 2 $114.34 0.68 $17114.05 3 $131.22 0.78 $17245.27 4 $150.74 0.89 $17396.02 5 $173.35 1.03 $17569.37 6 $199.59 1.18 $17768.95 7 $230.11 1.36 $17999.07 8 $265.73 1.57 $18264.79 9 $307.40 1.82 $18572.20 10 $356.34 2.11 $18928.53 11 $414.02 2.45 $19342.55 12 $482.30 2.85 $19824.85 13 $563.53 3.33 $20388.38 14 $660.69 3.91 $21049.07 15 $777.59 4.60 $21826.67 16 $919.20 5.44 $22745.87 17 $1092.02 6.46 $23837.90 18 $1304.68 7.72 $25142.57 19 $1568.73 9.28 $26711.30 20 $1899.94 11.24 $28611.24 21 $2319.99 13.73 $30931.23 22 $2859.24 16.92 $33790.47 23 $3560.84 21.07 $37351.32 24 $4487.14 26.55 $41838.46 25 $5729.86 33.90 $47568.32
You started with $16900.00 and ended up with $47568.32 for a total gain of 181.47%. This was over 25 years so that makes your average annual gain 7.26%.
Yield on Cost is a concept whereby you calculate your existing yield vs the share price you paid when you purchased the investment (your cost basis) not the current share price. For people who buy dividend growth stocks (stocks that routinely increase their dividend) the yield on cost metric is a way to measure the annual income or return on your original investment if you hold it for years. If the dividend grows while at the same time you reinvest your dividend you achieve even more compounding of your return. Income investors are especially interested in the metric of yield on cost. If you hope to one day draw your income fully, or in large part, from your investments, you would like to know how much you need to invest today, in order to reach the yield you want in the future. Of course, past performance is no guarantee of future performance, and companies will not always increase their dividend at a linear rate. So sometimes you rely on estimates. To figure out the dividend growth rate of a stock look at average annual dividend increases for the past 10 years, it will not be perfect, but it should give you a good idea.
