How To Earn $500 A Month From Wells Fargo Stock Ahead Of Q3 Earnings

Wells Fargo & Company WFC will release earnings results for its third quarter before the opening bell on Friday, Oct. 11.

Analysts expect the San Francisco-based bank to report quarterly earnings at $1.28 per share, down from $1.48 per share in the year-ago period. Wells Fargo projects to report revenue of $20.41 billion for the recent quarter, according to data from Benzinga Pro.

Some Wells Fargo investors may be eyeing potential gains from the company's dividends. Wells Fargo currently offers an annual dividend yield of 2.78%. That’s a quarterly dividend of 40 cents per share ($1.60 a year).

To figure out how to earn $500 monthly from Wells Fargo, we start with the yearly target of $6,000 ($500 x 12 months).

Next, we take this amount and divide it by Wells Fargo's $1.60 dividend: $6,000 / $1.60 = 3,750 shares

So, an investor would need to own approximately $215,775 worth of Wells Fargo, or 3,750 shares to generate a monthly dividend income of $500.

Assuming a more conservative goal of $100 monthly ($1,200 annually), we do the same calculation: $1,200 / $1.60 = 750 shares, or $43,155 to generate a monthly dividend income of $100.

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

The dividend yield is calculated by dividing the annual dividend payment by the current stock price. As the stock price changes, the dividend yield will also change.

For example, if a stock pays an annual dividend of $2 and its current price is $50, its dividend yield would be 4%. However, if the stock price increases to $60, the dividend yield would decrease to 3.33% ($2/$60).

Conversely, if the stock price decreases to $40, the dividend yield would increase to 5% ($2/$40).

Further, the dividend payment itself can also change over time, which can also impact the dividend yield. If a company increases its dividend payment, the dividend yield will increase even if the stock price remains the same. Similarly, if a company decreases its dividend payment, the dividend yield will decrease.

Price Action: Shares of Wells Fargo gained by 0.4% to close at $57.54 on Wednesday.

On Oct. 8, Wolfe Research analyst Steven Chubak upgraded Wells Fargo from Peer Perform to Outperform and announced a $65 price target.

Read More:

• Top 3 Industrials Stocks Which Could Blast Off This Quarter

Image: Shutterstock