Yield On Cost - YOC

AAA

DEFINITION of 'Yield On Cost - YOC'

The annual dividend rate of a security divided by the average cost basis of the investments. It shows the dividend yield of the original investment. If the number of shares owned by the investor does not change, the yield on cost will increase if the company increases the dividend it pays to shareholders; otherwise it will remain the same.


To calculate yield on cost for a stock, an investor must divide the stock's annual dividend by the average cost basis per share and multiple the resulting number by 100 (to get a percentage).


For example, an investor who purchased 10 shares of stock at $15 and 20 shares at $18 would have an average cost basis of $17/share ($15*10 + $18*20)/(10 + 20). If the annual dividend is $0.90 per share, the yield on cost would be 5.29% ($0.90/$17 * 100).

INVESTOPEDIA EXPLAINS 'Yield On Cost - YOC'

Because the yield on cost depends on the price paid for the investment, the same stock portfolio can have a different yield on cost if shares are purchased over a period of time. Many investors focus instead on current yield when comparing the dividends of different stocks.

RELATED TERMS
  1. Average Cost Basis Method

    A system of calculating the cost basis on mutual fund positions ...
  2. Dividend Rate

    The total expected dividend payments from an investment, fund ...
  3. Current Yield

    Annual income (interest or dividends) divided by the current ...
  4. Dividend

    1. A distribution of a portion of a company's earnings, decided ...
  5. Dividend Yield

    A financial ratio that shows how much a company pays out in dividends ...
  6. Policyholder Dividend Ratio

    The policyholder dividend ratio is a measurement of the profitability ...
Related Articles
  1. Investing Basics

    The Power Of Dividend Growth

    Dividends may not seem exciting, but they can certainly be lucrative. Learn more here!
  2. Investing

    Dividend Yield For The Downturn

    High-dividend stocks make excellent bear market investments, but the payouts aren't a sure thing.
  3. Markets

    The 4 Basic Elements Of Stock Value

    Investors use these four measures to determine a stock's worth. Find out how to use them.
  4. Fundamental Analysis

    Why Dividends Matter

    Seven words that are music to investors' ears? "The dividend check is in the mail."
  5. Markets

    Your Dividend Payout: Can You Count On It?

    We go over several telling factors that can help you answer this question and avoid losses.
  6. Investing Basics

    How Dividends Work For Investors

    Find out how a company can put its profits directly into your hands.
  7. Retirement

    Dividends Still Look Good After All These Years

    Find out how this "first love" still holds its bloom as it ages.
  8. Investing Basics

    How and when are stock dividends paid out?

    Learn about why, when and how companies declare and issue dividend payments to common stock shareholders. Also learn the timeline for when they are processed.
  9. Economics

    Analyzing Warren Buffett's 2013 Famous Shareholder Letter

    Reading the chairman of Berkshire Hathaway's letters has been one of the best sources of investment education for value investors around the world.
  10. Mutual Funds & ETFs

    Revealed: America’s Best (And Worst) Airlines

    The folks PO'd enough to vent about it on Twitter, “Those #AmericanAirlines losers canceled my flight!” As it turns out, those tweets can be valuable.

You May Also Like

Hot Definitions
  1. Christmas Island Dollar

    The former currency of Christmas Island, an Australian island in the Indian Ocean that was discovered on December 25, 1643. ...
  2. Santa Claus Rally

    A surge in the price of stocks that often occurs in the week between Christmas and New Year's Day. There are numerous explanations ...
  3. Commodity

    1. A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often ...
  4. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  5. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  6. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
Trading Center