How To Earn $500 A Month From Wells Fargo After Upbeat Earnings

Wells Fargo & Company WFC reported better-than-expected earnings for its third quarter on Friday.

The bank’s quarterly EPS reached $1.48, beating the consensus of $1.24 and $0.86 a year ago The bank reported Q3 revenues of $20.86 billion, up 21% Y/Y, above the consensus of $20.11 billion.

For FY23, Wells Fargo expects net interest income to be ~16% higher than the FY22 level of $45.0 billion, up from prior guidance of ~14% higher, with 4Q23 expected to be ~$12.7 billion.

Following Wells Fargo's earnings report, some investors may be eyeing potential gains from the company’s dividends. As of now, Wells Fargo offers an annual dividend yield of 3.42%, which is a quarterly dividend amount of 35 cents per share ($1.40 a year).

So, how can investors exploit its dividend yield to pocket a regular $500 monthly?

To earn $500 per month or $6,000 annually from dividends alone, you would need an investment of approximately $175,555 or around 4,286 shares. For a more modest $100 per month or $1,200 per year, you would need $35,103 or around 857 shares.

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To calculate: Divide the desired annual income ($6,000 or $1,200) by the dividend ($1.40 in this case). So, $6,000 / 1.40= 4,286 ($500 per month), and $1,200 / 1.40= 857 shares ($100 per month).

Note that dividend yield can change on a rolling basis, as the dividend payment and the stock price both fluctuate over time.

How that works: The dividend yield is computed by dividing the annual dividend payment by the stock's current price.

For example, if a stock pays an annual dividend of $2 and is currently priced at $50, the dividend yield would be 4% ($2/$50). However, if the stock price increases to $60, the dividend yield drops to 3.33% ($2/$60). Conversely, if the stock price falls to $40, the dividend yield rises to 5% ($2/$40).

Similarly, changes in the dividend payment can impact the yield. If a company increases its dividend, the yield will also increase, provided the stock price stays the same. Conversely, if the dividend payment decreases, so will the yield.

WFC Price Action: Shares of Wells Fargo were up 3.07% to close at $40.96 on Friday.

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