How To Earn $500 A Month From Costco Stock Ahead Of Q2 Earnings

by Avi Kapoor Benzinga Staff Writer

Zinger Key Points

A more conservative goal of $100 monthly dividend income would require 259 shares of Costco.
An investor would need to own $1,354,741 worth of Costco to generate a monthly dividend income of $500.
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Costco Wholesale Corporation COST will release its second-quarter financial results, after the closing bell, on Thursday, March 6.

Analysts expect the company to report quarterly earnings at $4.11 per share, up from $3.92 per share in the year-ago period. Costco projects quarterly revenue of $63.08 billion, compared to $58.44 billion a year earlier, according to data from Benzinga Pro.

Costco has missed analyst revenue estimates in two straight quarters and six of the last 10 quarters overall.

With the recent buzz around Costco, some investors may be eyeing potential gains from the company's dividends too. As of now, Costco offers an annual dividend yield of 0.44%, which is a quarterly dividend amount of $1.16 per share ($4.64 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 $1,354,741 or around 1,293 shares. For a more modest $100 per month or $1,200 per year, you would need $271,367 or around 259 shares.

To calculate: Divide the desired annual income ($6,000 or $1,200) by the dividend ($4.64 in this case). So, $6,000 / $4.64 = 1,293 ($500 per month), and $1,200 / $4.64 = 259 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.

COST Price Action: Shares of Costco gained 1.1% to close at $1,047.75 on Wednesday.