Learn · Track 3: Dividends, bonus and rights · lesson 6 of 6 · Beginner
Dividend yield vs yield on cost: a PSX worked example
Dividend yield divides dividends by today's price; yield on cost divides them by what you paid. FFC's Rs 41 gives 7.67% and 8.52% on two dated prices.
Dividend yield (dividend yield meaning: dividend kitne percent mila) is the dividends per share over the last twelve months divided by the current share price. Yield on cost is the same dividends divided by the price you paid. On Fauji Fertilizer (FFC), the snapshot as of 9 October 2026 shows Rs 41 per share paid in the past twelve months. Against the 9 October 2026 close of Rs 534.86, the dividend yield is 7.67%. Against the Rs 481.04 close of 10 October 2025, a buyer’s yield on cost is 8.52%. The dividends are identical. Only the divisor changes, and that is the whole difference between the two measures.
What is dividend yield?
Dividend yield answers a question about the share as it stands today: how much cash did this share pay out compared with what it costs to buy now?
The formula is:
Dividend yield = dividends per share over the last 12 months ÷ current price × 100
The figure changes when either side changes. A new payout raises the numerator. A price fall raises the yield with no change in the dividend, which is why a high yield is sometimes a sign of a falling price. The highest dividend-yield stocks post shows that effect on the KSE-100 and explains why one-off payouts distort the figure.
Dividend yield is useful for comparing shares. Two shares with the same yield paid the same dividend income over the last year for each rupee spent at today’s prices.
What is yield on cost?
Yield on cost answers a question about your own position: how much cash did my original investment pay out?
Yield on cost = dividends per share over the last 12 months ÷ your average purchase price × 100
It depends on when you bought and at what price. Two investors in the same share on the same day have different yields on cost if they bought at different prices. If you bought in several lots, the divisor is your average cost per share, the figure a portfolio tracker maintains as weighted-average cost.
| Measure | Divisor | Whose number is it? | Changes when |
|---|---|---|---|
| Dividend yield | Today’s price | Everyone’s, the same for all holders | The price or the payouts change |
| Yield on cost | Your average purchase price | Yours alone | You buy more, or the payouts change |
A worked example: Fauji Fertilizer (FFC)
FFC is a KSE-100 company that paid four cash dividends in the twelve months to 9 October 2026. The figures below are from the SuperX snapshot, as of 9 October 2026, which records PSX corporate announcements. They are before tax. The 12-month window runs from 10 October 2025 to 9 October 2026.
| Ex-date | Announced | % of face value | Rs per share |
|---|---|---|---|
| 3 Nov 2025 | 23 Oct 2025 | 95% | 9.50 |
| 6 Mar 2026 | 29 Jan 2026 | 85% | 8.50 |
| 11 May 2026 | 29 Apr 2026 | 85% | 8.50 |
| 10 Aug 2026 | 29 Jul 2026 | 145% | 14.50 |
| Total | 41.00 |
FFC’s face value is Rs 10, so 95% of face value is Rs 9.50. How PSX dividend percentages convert to rupees explains that step. Two dated closing prices from the snapshot complete the example.
| Date | FFC close | What it represents |
|---|---|---|
| 10 October 2025 | Rs 481.04 | A buyer’s cost, one year earlier |
| 9 October 2026 | Rs 534.86 | The latest close in the snapshot |
The price rose Rs 53.82, or 11.19%, over the year. Now the two yields:
- Dividend yield on 9 October 2026: 41.00 ÷ 534.86 = 7.67%. This matches the trailing yield shown on the FFC dividend page.
- Yield on cost for the 10 October 2025 buyer: 41.00 ÷ 481.04 = 8.52%.
The buyer who held through all four payouts received Rs 41.00 on a cost of Rs 481.04. The market figure is lower because the price rose. In this example the yield-on-cost figure is 0.85 percentage points higher.
A buyer’s total pre-tax gain over the year was the Rs 41.00 of dividends plus the Rs 53.82 of price gain, which is Rs 94.82 on Rs 481.04, or 19.71%. Yield on cost covers only the dividend part of that.
Why does yield on cost flatter old positions?
Yield on cost compares today’s income with yesterday’s price. For an investor who holds a rising share, the dividend per share can grow while the cost stays fixed in the past, so the ratio drifts upward.
The FFC case is a gentle version, because the price rose only 11.19% in the year. The effect grows with time and with price gains. The table below holds the Rs 41.00 constant and changes only the cost. The Rs 240 row is a made-up cost for illustration. It is not an FFC price from any date.
| Purchase price (cost per share) | Yield on cost on Rs 41.00 |
|---|---|
| Rs 240.00 (illustrative, not a real price) | 17.08% |
| Rs 481.04 (close, 10 Oct 2025) | 8.52% |
| Rs 534.86 (close, 9 Oct 2026) | 7.67% |
A holder whose cost is Rs 240 would see a yield on cost above 17%. That figure tells you about the past purchase. It does not tell you what the share pays a new buyer today, which is 7.67%. Read yield on cost as a measure of your own income history. The money tied up in the position today is its market value, and the yield on that is the dividend yield.
The effect also works against a buyer near a peak. FFC’s highest close in the snapshot’s 12-month window was Rs 673.16 on 27 January 2026. Dividing Rs 41.00 by that price gives 6.09%. That is a ratio only, because a buyer on that day received three of the four payouts so far (Rs 31.50), not Rs 41.00.
What is the difference between trailing and declared yield?
Both are dividend yields. They differ in which dividends go in the numerator.
Trailing yield uses dividends already paid in the last twelve months. It is a fact about the past. The 7.67% above is a trailing yield.
Declared yield uses a dividend the company has announced. Often it is the latest announcement alone, or the latest announcement multiplied to give a yearly figure. FFC’s latest announcement in the snapshot is Rs 14.50, announced on 29 July 2026 with an ex-date of 10 August 2026. As a share of the 9 October 2026 price, that single payout is 14.50 ÷ 534.86 = 2.71%.
The risk is annualising. Four times Rs 14.50 is Rs 58.00, which gives 10.84% on the same price. That is 3.17 percentage points above the trailing figure. The four FFC payouts in the table ranged from Rs 8.50 to Rs 14.50, so the latest one is not a typical quarter. Multiplying one payout by four assumes the next three are equal to it. The dividend history does not support that assumption for FFC, and SuperX makes no forecast for the next payouts.
| Type | Numerator | FFC example (price Rs 534.86) |
|---|---|---|
| Trailing yield | Dividends paid in the last 12 months (Rs 41.00) | 7.67% |
| Latest declared, one payout | Latest announced dividend (Rs 14.50) | 2.71% |
| Latest declared, annualised ×4 | Rs 58.00 | 10.84% |
Check which type a website shows before comparing two figures. The ex-date, book closure and record date post explains when a declared dividend becomes one you are owed.
What do these yields not include?
- Tax. The figures are before withholding tax. The rate depends on your filer status. See withholding tax on dividends in Pakistan.
- Price change. A yield measures income only. The 19.71% total gain in the example above is more than twice the 8.52% yield on cost.
- Future dividends. Both measures describe the past. A company’s earnings, not its past payouts, decide the next dividend.
Frequently asked questions
Is yield on cost or dividend yield better?
Neither is better. They measure different things. Dividend yield describes the share at today’s price, and yield on cost describes your own purchase. Use dividend yield to compare shares and yield on cost to see the income from your own position.
Can yield on cost be higher than dividend yield?
Yes, when the price is now above what you paid, as in the FFC example: 8.52% against 7.67%. It is lower when you bought above today’s price.
What is a good dividend yield on PSX?
There is no fixed threshold. A high yield can come from a falling price or a one-off payout, so read it with the payout history and the earnings. The highest-yield post lists KSE-100 companies with the method stated.
How do I find my yield on cost?
Divide the dividends per share you received in the last twelve months by your average purchase price per share. If you bought in several lots, use the weighted-average cost across all of them.
Does a stock split or bonus issue change yield on cost?
It can change the per-share figures. A bonus issue raises your share count and lowers the average cost per share, so use the adjusted cost. See bonus shares on PSX.
Try it
Check the trailing yield, the payout history and the announced-but-unpaid dividends for any PSX company on the SuperX dividends page. The SuperX app opens on 23 November 2026. From that date it tracks your trades, weighted-average cost and the effect of dividends on your shares, as described on the tracker page, and it is free.
Education, not investment advice.
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