How To Earn $500 A Month From Microchip Technology Stock Ahead Of Quarterly Earnings

Microchip Technology Incorporated MCHP will release earnings results for its second quarter after the closing bell on Tuesday.

Analysts expect the Chandler, Arizona-based company to report quarterly earnings at 43 cents per share, down sharply from $1.62 per share in the year-ago period. Microchip Technology projects to report revenue of $1.15 billion for the recent quarter, compared to $2.27 billion a year earlier, according to data from Benzinga Pro.

On Oct. 21, Susquehanna analyst Christopher Rolland maintained Microchip Technology with a Positive rating and lowered the price target from $105 to $95.

With the recent buzz around Microchip Technology, some investors may be eyeing potential gains from the company's dividends too. As of now, Microchip Technology offers an annual dividend yield of 2.44%, which is a quarterly dividend amount of 45.4 cents per share ($1.816 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 $246,049 or around 3,304 shares. For a more modest $100 per month or $1,200 per year, you would need $49,225 or around 661 shares.

To calculate: Divide the desired annual income ($6,000 or $1,200) by the dividend ($1.816 in this case). So, $6,000 / $1.816 = 3,304 ($500 per month), and $1,200 / $1.816 = 661 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.

MCHP Price Action: Shares of Microchip Technology fell 0.5% to close at $74.47 on Monday.

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