deaddog wrote: ↑
26 Jun 2017 10:44
Isn't yield on cost how you quote bonds, savings etc. Why do you consider it a BS number.
For bonds, there's the coupon yield which is based on maturity value, which is unlikely to be the cost unless you bought the bond at issue. You could also quote a current yield based on the coupon and the current market price. The usually quoted "yield" is yield to maturity which is really the result of a discounted cash flow calculation which takes into account both coupon and capital change to the maturity value (assuming no default). For savings yields, I think yield on cost and market value might be indistinguishable if you count reinvested interest as Buys; essentially there is no change in the capital value of the dollars in the account, unlike a stock share. There's an old thread
on this forum where many views about yield on cost were given, so it's probably not good to re-start that debate in this thread.
I also hear dividend investors say that they are receiving x number % on their money while they wait for a stock to recover.
Depends what they mean by "their money" ... is that cost on present worth? If the stock is waiting for recovery, that means it's down so if it's YoC at least they're not using a pumped up number for the yield.
For a buy and hold investor of dividend growth stocks, investing for income, I would think yield on cost would be a legit number.
I disagree. If the goal is income investing, you should look at what you can get on your money now. That may mean selling at market value and purchasing another investment with higher income yield on that value.