How To Earn $500 A Month From Microsoft Stock

With the recent buzz around Microsoft Corporation MSFT, some investors may be eyeing potential gains from the company's dividends.

Currently, the Redmond, Washington-based tech giant offers an annual dividend yield of 0.69%, which is a quarterly dividend amount of 83 cents per share ($3.32 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 $865,318 or around 1,807 shares. For a more modest $100 per month or $1,200 per year, you would need $172,872 or around 361 shares.

To calculate: Divide the desired annual income ($6,000 or $1,200) by the dividend ($3.32 in this case). So, $6,000 / $3.32 = 1,807 ($500 per month), and $1,200 / $3.32 = 361 shares ($100 per month).

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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.

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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.

Price Action: Shares of Microsoft gained 1.3% to close at $478.87 on Thursday.

Citigroup analyst Tyler Radke maintains Microsoft with a Buy rating and raised the price target from $540 to $605.

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