How To Earn $500 Per Month From Air Products & Chemicals

Air Products & Chemicals APD stock is one of the largest producers of industrial gases and chemicals, operating across the Americas, Europe, the Middle East and Africa. The company has increased its dividend payouts for 42 consecutive years. Its dividend has grown at a compound annual growth rate (CAGR) of about 9.5% over the past decade. As of July 5, Air Products and Chemicals' dividend yield is approximately 2.8%. With increasing inflation and strong market demand for stable dividend income, understanding how to earn $500 per month from this dividend play is noteworthy. However, let's first examine the latest sentiment around the stock and briefly analyze its fundamentals.

Air Products and Chemicals reported mixed fiscal second-quarter results in April, with adjusted EPS of $2.85, exceeding estimates by $0.15. However, its revenue of $2.93 billion reflected an 8.4% year-over-year decline, trailing the Street consensus by $130 million. However, the company affirmed its solid earnings outlook for 2024. The company expects adjusted EPS in the year to come in the range of $12.20 to $12.50 versus the consensus estimate of $12.31. This EPS is 6% to 9% higher than the previous year's EPS. 

In 2014, Air Products and Chemicals revealed the "Five Point Plan" to focus on core operations and spin off noncore operations to boost profitability and efficiency. Since then, the company's EPS has grown at a CAGR of 9.4%. 

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Air Products and Chemicals' Future Growth Catalysts

Air Products and Chemicals supply gases like oxygen, nitrogen, argon, helium, and hydrogen, which form the basis of global manufacturing and industrial production. Analysts believe the company is set to benefit from the expected rise in demand for industrial chemicals and gases as global manufacturing activity grows. A report from Artisan Partners estimates that industrial gas sales are expected to jump to $173 billion by the end of this decade from $99 billion in 2022, growing at a CAGR of 7.4%. 

Another growth catalyst for APD comes from the LNG market as the company also sells LNG process technology and equipment. According to a report by Shell, global demand for LNG is expected to rise by a whopping 50% by 2040, driven by a broader shift from coal to gas mostly in Asia. 

Valuation

While APD shares have lost about 7% in value so far this year, the stock's forward P/E is 18.8, well below its five-year average of 26. Wall Street expects the company's earnings to grow 9.5% next year and revenue to increase 7.20%.

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How to Make $500 Per Month in Dividends from Air Products and Chemicals

To determine how much you need to invest to make $500 per month from APD, we will first calculate the total number of shares you need to buy. Air Products and Chemicals pays a quarterly dividend of $1.77 a share, which amounts to $7.08 annually ($1.77 x 4 = $7.08).

Now, let's calculate the number of shares:

Number of shares needed = $6,000 / $7.08 = 847.45

To earn $500 a month from Air Products and Chemicals, you will need about 847 company shares. How much money do you need to buy these shares?

We will multiply the total number of shares by the stock’s latest price to calculate that. Air Products and Chemicals closed at $253 on July 3.

Total Investment Needed to Earn $500/month from Air Products and Chemicals Dividends = $253 x 847 = $214,291

To earn $500 per month in dividends from Air Products and Chemicals, you'd need to invest $214,291 in the company.

Dividend Safety and Risks

Air Products and Chemicals is a $56 billion company with a global presence and a strong position in a growing industry. Based on the midpoint of the EPS outlook, APD's payout ratio is 57%, which is not outlandishly high and shows the company is allocating significant resources for growth. Despite this, it would be wise to consider the risks before investing a hefty amount in the company for dividends. An Air Products and Chemicals' business relies heavily on global manufacturing; a persistent slowdown in the global economy amid high interest rates and geopolitical volatility could cause troubles for the company in the short term.

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