8-Year Dividend Growth Fingerprints: Starting Yield vs Yield on Cost

Introduction

Dividend growth investing is about more than today's yield. This visualization compares each company's starting yield at the original purchase date with the yield on cost achieved after 10 complete calendar years, highlighting how consistent dividend increases can change an investment's income profile over time. Each fingerprint is made up of capsule segments representing the year-over-year dividend growth between consecutive annual dividend totals. Taller capsules indicate stronger annual dividend growth, making it easy to spot periods of acceleration or steadier growth across different companies.

Key insights

• Yield on Cost and Growth Are Different Measures

  The companies are ranked by ending yield on cost rather than total dividend growth. ABBV finishes with the highest yield on cost at 12.30%, while AVGO records the highest total dividend growth but a much lower ending yield on cost. This illustrates that stronger dividend growth alone does not necessarily produce the highest yield on cost when starting yields differ.

• Fingerprints Reveal Growth Patterns

  Each capsule represents the year-over-year dividend growth between consecutive annual dividend values. Comparing the capsule patterns allows investors to distinguish companies with consistently strong dividend increases from those with steadier or more moderate growth over the decade, without relying on a single annual increase.

• Exceptional Years Should Be Viewed in Context

  Several companies experienced standout annual increases, including AVGO, ABBV, JPM, LOW, HD, and PH. These notable years are visible in their fingerprints, but they represent individual intervals rather than persistent long-term growth rates.

• Starting Yield Matters

  The visualization highlights the relationship between starting yield and ending yield on cost. Companies that began with higher starting yields and continued increasing dividends may finish with higher yield on cost than companies that delivered faster percentage growth from a much lower starting yield. This helps illustrate the trade-off between initial income and subsequent dividend growth.

Methodology

Yield on cost is calculated using the original purchase price and calendar-year regular dividends, with dividends not reinvested. Starting yield is the first year's dividend divided by the original purchase price, while ending yield on cost uses the final year's dividend and the same original purchase price. The fingerprint capsules represent year-over-year dividend growth between consecutive annual dividend values, allowing visual comparison of dividend growth patterns across the full period.

Related links

• Blog article
• YouTube video