Here's An Oil Stock That'll Pay You $500 A Month

In a mixed bag of news for the oil sector Wednesday, oil prices fell as much as 3.4% even as U.S. crude inventories registered a historic plunge.

What happened: The Energy Information Administration reported that U.S. crude stocks nosedived 17 million barrels in the week, the steepest drop since 1982, fueled by escalated refinery runs and robust crude exports.

Despite the inventory draw, U.S. oil prices couldn’t escape the downslide, feeling the ripple effects of broader market turmoil triggered by Fitch’s downgrade of the U.S. government’s top credit rating.

Oil stocks couldn't escape the downslide either. Shares of Devon Energy Corp DVN sank more than 7%, feeling the pressure of falling oil prices.

However, outside of the "buy the dip" mentality, there is a silver lining for income investors: dividends. With shares down 7% and its generous dividend yield of 9.10%, Devon Energy is looking rather attractive.

So, if you’re wondering how much you need to invest in Devon Energy to get a monthly dividend check of $500, here’s the math:

An investment of about $65,934, or 1,326 shares in Devon Energy would translate into a $500 dividend payout each month ($6,000 per year). But if you’re looking for a more modest dividend income, investing around $13,186.81, or 265 shares, would generate an additional $100 per month.

Read Also: EXCLUSIVE: AI Bubble In Sight? ‘Cow Guy’ Says ‘Sell’ When Your Uber Driver Buys In

Note that the 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.

If a stock pays an annual dividend of $2 and its current price is $50, 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).

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.

Read Next: Deja Vu: After Fitch’s Cut To US Credit Rating, A Look At The Market Fallout From S&P’s 2011 Downgrade

Photo: Shutterstock