Understanding Yield on Cost (YOC) is one of the most satisfying parts of long-term dividend investing. It essentially shows you the “personal” interest rate you are earning on your initial investment, rather than the current market rate.
In the context of the Div Tracker app, here is a breakdown of what Yield on Cost (TTM) means and how it is calculated.
What is Yield on Cost (YOC)?
Yield on Cost measures the dividend yield based on the price you actually paid for a stock, rather than its current market price.
- Yield (Forward/Current): Calculated using the current stock price.
- Yield on Cost: Calculated using your average purchase price (Average Cost).
As a company increases its dividend over time, your Yield on Cost rises, even if the stock price also goes up. This is why long-term investors love this metric—it shows the “power of time” in your portfolio.
What does “TTM” mean?
TTM stands for Trailing Twelve Months.
In Div Tracker, this means the app is looking at the total dividends actually paid out by the company over the past 12 months to calculate the yield, rather than predicting what they might pay in the future (which would be “Forward Yield”).
The Formula
The math behind it is quite simple:
Yield on Cost (TTM) = {Total Dividends Paid per Share (Last 12 Months)}/{Your Average Purchase Price per Share}
Why it Matters: An Example
Imagine you bought a stock years ago, and you’ve held it while the company grew.
| Metric | Scenario A (The Past) | Scenario B (Today) |
| Stock Price | $100 (Your Cost) | $200 (Market Price) |
| Annual Dividend | $3.00 | $6.00 |
| Current Yield | 3% | 3% |
| Yield on Cost | 3% | 6% |
The Takeaway: Even though the “Current Yield” looks the same (3%), your Yield on Cost has doubled to 6% because the company increased its dividend while your initial investment stayed the same.
How to use it in Div Tracker
When you see this figure in the app:
- Check your performance: If your YOC (TTM) is significantly higher than the current Dividend Yield, it means you’ve made a great pick and the company is growing its payout.
- Evaluate “Yield Traps”: If your YOC is dropping, it might mean the company has cut its dividend, or you have been “averaging up” by buying more shares at a much higher price.
A quick tip: Remember that YOC doesn’t tell you if the stock is a good buy today (Current Yield does that), but it’s a fantastic “scorecard” for how hard your original dollars are working for you now.