Zinger Key Points
- A more conservative goal of $100 monthly dividend income would require owning 2,500 shares of Smith & Wesson Brands.
- An investor would need to own $204,250 worth of Smith & Wesson Brands to generate a monthly dividend income of $500.
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Smith & Wesson Brands, Inc. SWBI will release earnings results for its fourth quarter, after the closing bell on Thursday.
Analysts expect the Springfield, Massachusetts-based firearm company to report quarterly earnings at 34 cents per share, up from 28 cents per share in the year-ago period. Smith & Wesson Brands expects to post revenue of $156.8 million for the quarter, compared to $144.78 million in the year-earlier quarter, according to data from Benzinga Pro.
On March 7, Smith & Wesson Brands reported better-than-expected third-quarter financial results.
With the recent buzz around Smith & Wesson Brands, some investors may be eyeing potential gains from the company's dividends, too. As of now, Smith & Wesson Brands offers an annual dividend yield of 2.94%, which is a quarterly dividend amount of 12 cents per share (48 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 $204,250 or around 12,500 shares. For a more modest $100 per month or $1,200 per year, you would need $40,850 or around 2,500 shares.
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To calculate: Divide the desired annual income ($6,000 or $1,200) by the dividend ($0.48 in this case). So, $6,000 / $0.48 = 12,500 ($500 per month), and $1,200 / $0.48 = 2,500 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.
SWBI Price Action: Shares of Smith & Wesson Brands gained 1.1% to close at $16.34 on Tuesday.
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