How To Earn $500 A Month From Bank of America After Earnings Beat

Bank of America Corp BAC on Tuesday reported better-than-expected earnings for its third quarter.

The bank said EPS for the quarter was $0.90, compared to $0.81 in the year-ago period, beating the consensus of $0.81. Revenue increased 3% year-over-year to $25.32 billion, beating the consensus of $25.14 billion.

With the buzz around Bank of America following upbeat earnings, some investors may be eyeing potential gains from the company’s dividends too. As of now, Bank of America offers an annual dividend yield of 3.48%, which is a quarterly dividend amount of 24 cents per share (96 cents 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 $172,625 or around 6,250 shares. For a more modest $100 per month or $1,200 per year, you would need $34,525 or around 1,250 shares.

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To calculate: Divide the desired annual income ($6,000 or $1,200) by the dividend (0.96 in this case). So, $6,000 / 0.96= 6,250 ($500 per month), and $1,200 / 0.96= 1,250 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.

BAC Price Action: Shares of Bank of America gained 2.3% to close at $27.62 on Tuesday.

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