Yield on Cost Explained: The Metric Long-Term Dividend Investors Track
Editorial Staff, reviewed November 2, 2026
Yield on cost is a holding's annual dividend divided by the price you paid for it. If you bought Broadcom (AVGO) at $185 and it pays $2.60 a year, your yield on cost is 1.41%, while a buyer at the Nov 3, 2026 close of $332.13 gets 0.78%.
What yield on cost actually measures
Current yield tells a new buyer what today's price earns. Yield on cost tells you what your own purchase earns. Your purchase price never changes, so your yield on cost moves only when the payment does: it rises with every raise and falls with every cut, whatever the share price does in between.
How to calculate yield on cost
Yield on cost = annual dividend per share / your cost per share x 100
| Purchase | Paid | Dividend a year | Yield on cost |
|---|---|---|---|
| AVGO at an example price | $185.00 | $2.60 | 1.41% |
| KO at an example price | $50.00 | $2.12 | 4.24% |
| KO at the Nov 3, 2026 close | $94.80 | $2.12 | 2.24% |
Every ticker page has a yield on cost box, so you can enter what you paid and get your number from the current payment, for example on AVGO or KO.
How yield on cost compounds over time
Yield on cost grows at the rate of the payment. This table starts from a 2.50% yield and holds each growth rate steady, which real companies don't do.
| Years held | 5% raises | 8% raises | 12% raises |
|---|---|---|---|
| 0 | 2.50% | 2.50% | 2.50% |
| 5 | 3.19% | 3.67% | 4.41% |
| 10 | 4.07% | 5.40% | 7.76% |
| 15 | 5.20% | 7.93% | 13.68% |
| 20 | 6.63% | 11.65% | 24.12% |
| 25 | 8.47% | 17.12% | 42.50% |
Over the last five years on our record, Broadcom's regular payments grew 12.5% a year and Coca-Cola's grew 4.7% a year, so both rates in the table have happened in practice.
When yield on cost misleads you
It ignores what your money could do now. Suppose you paid $60 for a stock now worth $300 that pays $6 a year. Your yield on cost is 10%, which sounds excellent. But the $300 you could sell it for is earning 2%, and that is the number to compare with anything else you might own. (Taxes on the gain matter too, and they can change the answer.)
It also says nothing about whether the payment is safe, because it looks only at the past and your own price. A holding can show a high yield on cost right up to a cut.
To model the growth, use the dividend growth calculator. To compare today's yields, use the dividend yield calculator.
Related dividend guides
This is general education and not tax or investment advice. Securities named here illustrate the arithmetic and are not suggestions. See the disclaimer.