Microsoft Corp. MSFT stock closed at $405.65 at the end of trading on Feb. 5. The stock price ranged from a high of $415.32 to a low of $245.61 in the preceding 52 weeks.
On Jan. 30 the American technology company filed its quarterly financials for the period ending Dec. 31, 2023. The financing activities section on Microsoft's cash flow statement showed $5.57 billion in cash dividends paid for the quarter compared to $5.07 billion for the same quarter of 2022. The company declared a quarterly dividend of $0.75 per share.
Based on a quarterly dividend of $0.75 per share, the annualized dividend payout for Microsoft is $3. Using the stock price on Feb. 5, its dividend yield is 0.74%.
How Can You Earn $500 Per Month As A Microsoft Investor?
If you set an earnings target of $500 per month or $6,000 annually from Microsoft's dividends, your estimated investment value would be $810,810, which is about 1,999 shares at $405.65 each. If your target is $100 per month, the investment value drops to $162,162 or about 400 shares.
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Calculating the estimated value of investments using dividend yields: When making an estimate, you need two key factors. One is your desired annual earnings target — $6,000 or $1,200 — and the second is the dividend yield of the stock, which is 0.74% in this case. So, $6,000 / 0.0074 = $810,810 to generate an income of $500 per month, and $1,200 / 0.0074 = $162,162 for $100 per month.
To determine a stock’s dividend yield, divide its annual dividend payments by the current price of the stock. The dividend yield may change because of a change in the stock price or the dividend payments over time.
Under the assumption that the stock price remains constant, the dividend yield tends to rise when the company's dividend value increases and vice versa. So, the dividend yield and the value of the dividend are positively correlated.
Assume a stock that pays $2 as an annual dividend is priced at $50. Its dividend yield would be $2 / $50 = 4%. If the stock price rises to $60, the dividend yield drops to 3.33% ($2 / $60). A drop in stock price to $40 will have an inverse effect and increase the dividend yield to 5% ($2 / $40).
Disclaimer: This calculation is according to the price per share on Feb. 5 using an annualized dividend. The price of Microsoft stock at the close of trading on Feb. 5 was $405.65.
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