Question 1

What does yield on cost mean?

Accepted Answer

Yield on cost is the current annual dividend per share divided by the price you originally paid for the shares, rather than the current market price. It shows how much income your original investment generates today, as a percentage of what you paid for it.

Question 2

Why does yield on cost differ from current yield?

Accepted Answer

Current yield divides the annual dividend by today's share price, so it changes whenever the price moves. Yield on cost keeps the original purchase price fixed in the denominator, so it only rises as the dividend itself grows — which is why long-term holders often see a yield on cost well above the fund's current yield.

Question 3

How does the dividend growth rate assumption affect this calculator?

Accepted Answer

The entire projection is built on one assumption: that VOO's dividend per share keeps growing at the rate you enter, compounding each year. A higher assumed growth rate produces a faster-rising yield on cost; a lower one produces a slower rise. Small changes in this assumption compound significantly over long holding periods.

Question 4

Is this yield on cost projection guaranteed?

Accepted Answer

No. This is a hypothetical projection based on a constant assumed dividend growth rate — actual dividend growth varies year to year with earnings, payout policy, and the companies in the index, and could be lower, higher, or even negative in some years. Treat this as an illustration of the mechanic, not a forecast.

Question 5

Does a rising yield on cost mean I'm making more money?

Accepted Answer

It means the income from your original investment is growing relative to what you paid, which is a meaningful sign of dividend growth over time. But it doesn't capture total return — price appreciation and reinvested dividends (modeled in the main calculator) are usually a larger share of VOO's total return than the dividend income alone.

Question 6

Does this calculator account for reinvested dividends?

Accepted Answer

No — this tool isolates yield on cost against your original cost basis and a fixed share count. To see how reinvesting dividends (DRIP) affects your total balance over time, use the main VOO calculator or the DRIP calculator.

Year	Yield on cost	Annual income (per share)
1	1.13%	$4.54
2	1.20%	$4.81
3	1.27%	$5.10
4	1.35%	$5.40
5	1.43%	$5.73
6	1.52%	$6.07
7	1.61%	$6.44
8	1.71%	$6.82
9	1.81%	$7.23
10	1.92%	$7.66
11	2.03%	$8.12
12	2.15%	$8.61
13	2.28%	$9.13
14	2.42%	$9.68
15	2.56%	$10.26

VOO Yield on Cost Calculator

Why long-term holders track yield on cost

Frequently asked questions