Polliesdividend

What is my Yield On Cost (YOC) in 2017?

Last year I wrote a post about Yield on Cost (YOC). See post YOC-2016. In this post I calculated the YOC for every stock I own. As we all know YOC is a common metric for Dividend Growth Investors to measure and manage their portfolio. And I’m one of them J.

 

www.polliesdividend.com

 

I thought it will be nice to compare my 2016-YOC with my 2017-YOC to see if there is progress.

Yield On Cost measures the rate of dividend income that your original investment earns today. Yield on cost is essentially the dividend yield based on your initial investment in a stock. If a company increases its dividend after you purchased shares. you will enjoy a higher rate of income return on your original investment – your yield on cost rises. And of course when a company cuts its dividend. your YOC will decrease.

Yield on cost shows you whether a stock’s dividend has been rising or falling since your investment was purchased.

I like tracking my yield on cost of my holdings to see the power of consistent dividend growth. I think it is exciting to see my investment literally begin to pay for itself with higher dividend income over time.

 

How to calculate your Yield On Cost

This is a very simple metric to calculate. All you need is a company’s annual dividend and your cost base per share. So to calculate your YOC. you need to divide a company’s annual dividend by the your cost base per share.

It will be a little more difficult when you have made more than one purchase of a company (for instance. when you use Dollar Cost Average). If you want your cost base per share purchase you have to turn to your broker. In this article I use my overall cost base per share.

 

Vrijheid Fonds

I track my YOC for my Vrijheid Fonds. In Table 1 you can see my YOC per share for 2017.

Company   Shares Share Price Cost Base Dividend Yield YOC
Ahold 416 16.69 3,506 0.57 3.42% 6.76%
Royal Dutch Shell 355 23.46 5,922 1.72 7.33% 10.31%
Unilever 243 48.35 6,540 1.38 2.55% 5.14%
Aflac $ 24 78.44 1,435 1.72 2.19% 2.88%
Archer-Daniels-Midland $ 41 41.45 1,499 1.28 3.09% 3.50%
AT&T $ 60 38.11 2,150 1.96 5.14% 5.47%
Billiton – PLC $ 30 31.35 1,578 1.08 3.44% 2.05%
Chevron $ 36 106.31 3,720 4.32 4.06% 4.18%
Coca Cola $ 80 45.06 3,001 1.48 3.28% 3.95%
Franklin Resources $ 50 45.10 1,811 0.80 1.77% 2.21%
General Elecrtic $ 60 27.44 1,587 0.96 3.50% 3.63%
Johnson& Johnson $ 45 132.87 4,628 3.36 2.53% 3.27%
McDonalds $ 21 152.50 2,093 3.76 2.47% 3.77%
Microsoft $ 32 68.17 1,507 1.56 2.29% 3.31%
Omega Healthcare Investment $ 144 33.70 4,959 2.52 7.48% 7.32%
Procter & Gamble $ 38 87.75 1,510 2.76 3.15% 6.95%
Realty Income $ 50 56.02 2,186 2.54 4.53% 5.81%
South 32 LTD $ 12 10.43 0.36 3.45% 100.00%
Target $ 70 52.68 4,069 2.48 4.71% 4.27%
Vereit $ 100 8.34 1,310 0.55 6.59% 4.20%
Wal-Mart Stores $ 45 75.32 2,931 2.04 2.71% 3.13%

Table 1. Yield on Cost for my Vrijheid Fonds.

You can see that most of my stocks have a positive YOC compared to the actual Yield. This means that for these shares my dividend growth strategy really works!

Unfortunately my Vrijheid Fonds has three companies were the YOC is lower than the actual yield. For BBL this is because they slashed the dividend last year and the stock price is way lower than the moment I bought these shares. OHI and VER are due to lower share price than the original purchase price.

The biggest difference between Yield and YOC are from the two companies I own the longest (since 2005). And this also shows that increasing dividend every year gives you an increasing YOC.

The overall my YOC is positive for my Vrijheid Fonds. The weighted average YOC is 4.64%.

 

Comparison

If we compare 2017 with to 2016. you can see that my weighted average YOC is slightly lower than last year. This very small decline comes from lower stock prices for my Consumer Discretionary stocks in 2017 in comparison with 2016.

Furthermore most of my companies have a better YOC than last year. And even two of the three stocks that were lacking last year (BBL. OHI and VER) have improved. 🙂 This is really nice and what I want.

The increase of the YOC is due to the dividend increases from the past 12 month

In Table 2 you can see the YOC from the two years.

Company   2016 2017
Ahold 6.57% 6.76%
Royal Dutch Shell 9.64% 10.31%
Unilever 4.68% 5.14%
Aflac $ 2.74% 2.88%
Archer-Daniels-Midland $ 3.28% 3.50%
AT&T $ 5.36% 5.47%
Billiton – PLC $ 1.22% 2.05%
Chevron $ 4.14% 4.18%
Coca Cola $ 3.73% 3.95%
Franklin Resources $ 0 2.21%
General Elecrtic $ 3.48% 3.63%
Johnson& Johnson $ 3.34% 3.27%
McDonalds $ 3.57% 3.77%
Microsoft $ 3.06% 3.31%
Omega Healthcare Investment $ 6.74% 7.32%
Procter & Gamble $ 6.74% 6.95%
Realty Income $ 5.48% 5.81%
South 32 LTD $ 0.00%
Target $ 3.98% 4.27%
Vereit $ 4.20% 4.20%
Wal-Mart Stores $ 3.07% 3.13%

Table 2. Yield on Cost comparison 2016-2017.

 

Finally

YOC does not play a role in my investment decision. As frequent readers of my blog know. for my investment decisions I use the metrics from my Pollie-Code. But yes. I like YOC and my positive weighted average YOC tells me that my dividend growth strategy works.

Do you calculate and track your YOC?  And do you use this metric in your investment decisions?

Cheers.

Pollie

Please follow and like us:
0

8 thoughts on “What is my Yield On Cost (YOC) in 2017?

  1. KeithX

    Hi Pollie,
    It has been a long time since I left a comment, even though I read most of your blog posts. I keep track of the current yield of each of my stocks, plus the YOC of the portfolio overall. Currently, our portfolio has a yield of 2,50% and a YOC of 2,93%. This is partly due to the 12,45% we have in cash, and we also have almost 4% in shares of AMZN and GOOGL that don’t pay any dividends (but have an excellent chance to out perform the S&P500 in the next 10 to 20 years).

    I don’t keep track of the YOC for each individual stock, but instead track the additional income that we get from reinvesting dividends. T has been our best performer in that respect. We bought 400 shares of T for a total of $13.555,81. Reinvested dividends have added another 78,5875 shares for a total of 478,5875. At the current dividend rate of $0,49 each quarter, the 78+ shares add over $154 to our annual income. T has a current yield of 5,3%. So, let’s see, our YOC would be 6,9%. Nice!

    I wish you all the best,
    KeithX

    1. Pollie Post author

      Hello Keith,

      A long time indeed since we spoke each other. How is retirement treating you?
      Your Portfolio YOC, is it a weighted average?
      Wow the T story is really impressive. Compound Interest at its best.
      Keep up the good work!

      Cheers

      Pollie

      1. KeithX

        Retirement is great! Nice to be able to get up and not rush to get somewhere.

        The portfolio YOC is indeed a weighted average.

        Keep up the good work, yourself!

  2. Dividend Daze

    Love being able to compare Yield vs YOC. Never really thought about bench marking/ comparing YOC over other years. Guess in theory, they should be increasing as well. Always nice finding new ways to analyze the data. Thanks for sharing.

  3. FerdiS

    Hi Pollie — I also track YOC and it is in my portfolio spreadsheet for each stock and for the portfolio. It is nice to see YOC grow over time, as companies increase their dividends!

    Good job and thanks for sharing!

  4. Pursuit2Freedom

    Hej Pollie,

    Just wondering. Why did your YOC on Unilever decrease? Did you add Unilever shares?

    I ask because they increased the dividend nicely each year, so in theory it should be higher then last year.

    1. Pollie Post author

      Ola P2F,

      Thanks for noticing this. It is a fault in one of the formulas. I corrected it. The YOC of Unilever in 2017 is higher than in 2016.
      Cheers,

      Pollie

Leave a Reply

Your email address will not be published. Required fields are marked *