How To Earn $500 A Month From Best Buy Stock After A Better-Than-Expected Q2

Best Buy Co Inc BBY posted better-than-expected results for the second quarter (Q2).

Q2 sales were $9.58 billion, beating the analyst consensus estimate of $9.52 billion. Adjusted EPS of $1.22 beat the analyst consensus of $1.06.

For the fiscal year of 2024, the company revised guidance for revenue to $43.8 billion-$44.5 billion from $43.8 billion-$45.2 billion (the Street view was $44.3 billion).

It now expects a comparable sales decline of 4.5% to 6% (vs. 3% to 6% earlier).

Telsey Advisory Group analyst Joseph Feldman maintains Best Buy with a Market Perform and raised the price target from $78 to $85.

Dividends: BBY currently offers an annual dividend yield of 4.78%, which is a quarterly dividend amount of $0.92 a share ($3.68 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 $125,396 or around 1,630 shares. For a more modest $100 per month or $1,200 per year, you would need $25,079 or around 326 shares.

To calculate: Divide the desired annual income ($6,000 or $1,200) by the dividend (3.68 in this case). So, $6,000 / 3.68 = 1,630 shares ($500 per month), and $1,200 / 3.68= 326 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.

BBY Price Action: Shares of Best Buy gained 3.9% to close at $76.93 on Tuesday.

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Photo: Courtesy of Best Buy