(10-08-2013, 10:14 PM)Kerim Wrote: But if I understand what you are saying here, cannew, you are not really talking about yield on cost, as typically defined (current dividend divided by purchase price). It is unclear to me from your posts if you are including in your assessment capital gains, but assuming so, then I think you are really talking about a variant of total return, which I suspect most here would agree is a very useful metric. You just happen to label it something close to "yield on cost."
Maybe I should have called the post Yield on Investment. I track the Income my investments return me, based on my total investment in the stock. That includes initial purchases, dividend re-investment and new purchases. I do not worry about capital gains, any discount for inflation or current market value.
The reason I invest is to get a stream of growing income, not to watch the current value of the investment. Almost every person here has suggested they are looking for an entry point to buy, which means they hope the market goes down (and so would the value of their holdings), so who cares what the market value is as we are all waiting for the price of our stocks to go down.
Just a side note: I use my Average Cost as a guide when to buy more shares of the stocks I own. Assuming the company is still on my list.
(10-09-2013, 07:53 AM)hendi_alex Wrote: A person could hold an under performing dog for ten years and then pat themselves on the back because YOC is 8% or 9%, but with that YOC of 9%, the purchasing power could have been cut in half over the period. Also as others pointed out, the market yield may be 2% and in the current market where there happens to be very attractive alternatives. The person who is living too much in the glow of YOC may never even consider swapping the position out for a replacement that has much more solid forward prospects.If that under performing dog (with an 8% or 9% yield on my YOC) is continuing to increase the dividend, at a rate faster than inflation, than yes I will gladly continue to hold it. Go back and look a WMT since 1997.