Zinger Key Points
- A more conservative goal of $100 monthly dividend income would require 417 shares of Seagate.
- An investor would need to own $203,447 worth of Seagate to generate a monthly dividend income of $500.
- Get the Real Story Behind Every Major Earnings Report
Analysts expect the Singapore-based company to report quarterly earnings at $1.88 per share, up sharply from 12 cents per share in the year-ago period. Seagate projects quarterly revenue of $2.32 billion, compared to $1.55 billion a year earlier, according to data from Benzinga Pro.
On Jan. 16, Wells Fargo analyst Aaron Rakers maintained Seagate with an Equal-Weight rating and lowered the price target from $120 to $110.
With the recent buzz around Seagate, some investors may be eyeing potential gains from the company's dividends, too. As of now, Seagate offers an annual dividend yield of 2.95%, which is a quarterly dividend amount of 72 cents per share ($2.88 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 $203,447 or around 2,083 shares. For a more modest $100 per month or $1,200 per year, you would need $40,728 or around 417 shares.
To calculate: Divide the desired annual income ($6,000 or $1,200) by the dividend ($2.88 in this case). So, $6,000 / $2.88 = 2,083 ($500 per month), and $1,200 / $2.88 = 417 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.
STX Price Action: Shares of Seagate gained 2.7% to close at $97.67 on Friday.
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