Yield on Cost (YOC) is a measure of dividend yield calculated by dividing the current annual dividend by the original price paid for the shares.
Why YOC Matters
For long-term investors in companies that grow their dividends, YOC can reach impressive levels. A stock bought decades ago with a 3% yield might have a 20% or 50% yield on cost today as the dividend per share has increased many times over.
Example of YOC Power
Imagine buying 100 shares of a stock at $100 per share ($10,000 total) when it pays a $3 dividend (3% yield). Ten years later, the stock price is $200 and the dividend has grown to $10.
- Market Yield: 5% ($10 ÷ $200)
- Yield on Cost: 10% ($10 ÷ $100)
The Psychological Benefit
YOC helps investors stay focused on the growing income stream their portfolio generates, especially during market volatility when share prices fluctuate.
DivAgent Educational Standards
This definition is part of the DivAgent Income Academy curriculum. Our glossary is designed to bridge the gap between institutional jargon and retail investor understanding. Each term is reviewed by our Research Team for accuracy, specifically in the context of:
- Tax implications (Ordinary vs. Qualified)
- Impact on Total Return calculations
- Relevance to Option-Income strategies
- Risk assessment in a retirement portfolio
*While we strive for precision, financial terminology can evolve. Always verify definitions with official regulatory sources (SEC, IRS) when making tax or legal decisions.