Bank of America: How To Earn $500 A Month From Dividend Yields - Bank of America (NYSE:BAC)

Bank of America Corporation BAC will release its first-quarter financial results before the opening bell on Tuesday, April 15.

Analysts expect the bank to report quarterly earnings at 82 cents per share, up from 76 cents per share in the year-ago period. Bank of America projects quarterly revenue of $26.91 billion, compared to $25.82 billion a year earlier, according to data from Benzinga Pro.

On April 7, Morgan Stanley analyst Betsy Graseck upgraded Bank of America from Equal-Weight to Overweight but lowered the price target from $56 to $47.

With the recent buzz around Bank of America, 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 2.89%. That’s a quarterly dividend amount of 26 cents per share ($1.04 a year).

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

Next, we take this amount and divide it by Bank of America's $1.04 dividend: $6,000 / $1.04 = 5,769 shares.

So, an investor would need to own approximately $207,396 worth of Bank of America, or 5,769 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 / $1.04 = 1,154 shares, or $41,486 to generate a monthly dividend income of $100.

Note that dividend yield can change on a rolling basis. 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. That means 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.

BAC Price Action: Shares of Bank of America gained by 0.3% to close at $35.95 on Friday.