What is dividend yield on cost?

MBH, this is a metric for deciding if the yield, (dividend) on a stock is growing compared to the cost or purchase price of a stock.

If the stock cost 1 dollar today and the yield is 3% and the same stock cost 1 dollar a year later, but the yield was now 6% then the yield on cost doubled.

This basically means that the company is increasing their dividend faster than the price of the stock is growing.

Some would argue that if you are buying the stock because you need the income from the dividend, then you would want those stocks with a growing yield on cost.

I think this metric mainly applies for those people putting together a portfolio of stocks, to produce income, such as in retirement. This divirsifies the portfolio to get some growth, and not just depend on yield that you would get by purchasing a bond.

Now some stocks yield increases because the stock itself is falling rapidly in value. Pfizer is a holding of mine whose yield increased from 3% to 6% because the stock price dropped. Most of the time, when this happens, the company then drops the dividend to save cash-so over time the yield goes back down. Not a good thing if you need income. So yields in income producing stocks, have to be taken in context of the overall health of the company.

Love feedback on whether this helps...