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).




Taobiz 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.