How To Earn $500 A Month From SPY Stock

This month, the SPDR S&P 500 ETF Trust SPY marked a milestone as it closed above the threshold that delineated its exit from the longest bear market since 1948.

Rising 0.6% to close at 4,293.93 on June 8, it registered a gain of more than 20% from its low on Oct. 12, 2022.

The bear market ran for 248 trading days, making it the lengthiest since the 484-day run that ended on May 15, 1948.

The ongoing exit from bear to bull market offers a chance for investors to reassess their investment strategies, one of which could be taking advantage of dividend yields.

That’s where SPY, the S&P 500 ETF, comes into play.

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SPY currently has a dividend yield of 1.51%. So how would you yield $500 from it? Potential capital appreciation aside, let's do some math.

To earn $500 a month, or $6,000 annually, with a dividend yield of 1.51%, you would need an investment of about $397,351, which equates to around 910 shares of SPY.

If you’re aiming for a more modest amount, say $100 a month ($1,200 annually), you’d need an investment of approximately $79,470, translating to about 182 shares of SPY.

Here’s how we calculate it: $6,000 / 0.0151 = $397,351 ($500 per month, $6,000 annually). $1,200 / 0.0151 = $79,470 ($100 per month, $1,200 annually).

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 price is $50, its dividend yield would be 4%. 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.

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