Yield on Cost (YOC): What It Is & Why Singapore Dividend Investors Track It

Yield on cost (YOC) is the annual dividend income divided by your original purchase price, expressed as a percentage. Unlike current yield which uses today’s price, YOC shows how much income you are earning relative to what you actually paid — a key metric for long-term dividend investors.

This article is for informational purposes only and does not constitute financial advice. Always consult a licensed financial adviser before making investment decisions.

What Is Yield on Cost?

Yield on cost (YOC) is a personal investment metric that measures your annual dividend income as a percentage of your original purchase price — not the current market price.

Formula: YOC = Annual Dividend per Share ÷ Cost per Share × 100%

For example, if you bought a Singapore REIT at S$1.20 five years ago, and it now pays an annual DPU of S$0.084 (which has grown from S$0.060 at purchase), your yield on cost is 7% (S$0.084 ÷ S$1.20) — even though the current yield for a new buyer at today’s price of S$1.50 might be only 5.6% (S$0.084 ÷ S$1.50).

YOC is most meaningful for long-term dividend investors tracking the growing income yield on their original investment, rewarding patient, buy-and-hold strategies where dividends grow over time.

Yield on Cost vs Current Yield: What Is the Difference?

The distinction between YOC and current yield is critical for understanding your real returns:

Metric	Formula	What It Measures
Yield on Cost (YOC)	Annual DPU ÷ Purchase Price	Your personal income yield relative to what you paid
Current Yield	Annual DPU ÷ Current Market Price	Yield a new buyer gets at today’s price

Current yield is the relevant metric for new investors deciding whether to buy. YOC is the relevant metric for existing investors tracking the performance of their holdings over time. Neither is “better” — they serve different analytical purposes.

YOC and Dividend Growth: The Compounding Power

YOC grows automatically when the company or REIT increases its distributions over time — without you needing to buy more units. This is the compounding power of dividend growth investing.

A simplified example with a Singapore REIT:

You buy 10,000 units at S$1.00 each (cost: S$10,000)
Year 1 DPU: S$0.055 → YOC: 5.5%, income: S$550
Year 5 DPU: S$0.070 → YOC: 7.0%, income: S$700
Year 10 DPU: S$0.090 → YOC: 9.0%, income: S$900

By Year 10, you are earning S$900/year on your original S$10,000 investment — a 9% YOC — even if the market price of the REIT has fluctuated. The original purchase is working harder over time.

This is why long-term investors in Singapore blue chips (DBS, OCBC) and high-quality S-REITs often have YOC figures well above current market yields — they bought at lower prices years ago and held as dividends grew.

YOC in Practice: Singapore REITs and Stocks

Here are illustrative YOC scenarios for Singapore investors (figures approximate, for educational purposes as at Q1 2026):

Investment	Entry Price (5yr ago)	Current DPS/DPU	YOC	Current Yield
DBS Group	S$22.00	S$2.16/yr	~9.8%	~6.0% (at S$36)
Parkway Life REIT	S$3.20	S$0.153/yr	~4.8%	~3.8% (at S$4.05)

These are illustrative examples. Your actual YOC depends on when you bought and at what price. Use the Dividend Portfolio Yield Calculator to track your personalised YOC across your portfolio.

Frequently Asked Questions

What is yield on cost (YOC)?

Yield on cost measures your annual dividend or distribution income as a percentage of your original purchase price. It is a personal metric that grows as dividends increase over time, rewarding long-term dividend investors who hold through periods of price volatility.

Why is yield on cost higher than current yield?

YOC is calculated on your (often lower) purchase price, while current yield uses today’s (often higher) market price. If you bought an asset years ago at a lower price, and dividends have grown since, your YOC will be higher than what a new buyer would receive at current prices.

Is yield on cost useful for evaluating new investments?

No — YOC is a personal metric for existing holders, not a screening tool for new buys. To evaluate whether a new investment is attractive, use current yield (dividend ÷ current price) and compare it with your return hurdle rate and alternatives.

How do I calculate my yield on cost for a Singapore REIT?

Divide the REIT’s current annual DPU by your original cost per unit, multiplied by 100. For example, if you paid S$1.30 per unit and the REIT now pays S$0.078 DPU per year, your YOC is 6% (S$0.078 ÷ S$1.30 × 100).

Does yield on cost include capital gains?

No — YOC measures income yield only (dividends or DPU ÷ cost). It does not reflect capital gains or losses on the original investment. Total return would need to include price appreciation or depreciation as well as reinvested dividends.

Yield on Cost