Zinger Key Points
- A more conservative goal of $100 monthly dividend income would require 221 shares of PepsiCo.
- An investor would need to own $166,814 worth of PepsiCo to generate a monthly dividend income of $500.
PepsiCo, Inc. PEP will release its fourth-quarter financial results, before the opening bell, on Tuesday, Feb. 4, 2025.
With the recent buzz around the soft drink company, some investors may also be eyeing potential gains from dividends. As of now, PepsiCo offers an annual dividend yield of 3.60%, which is a quarterly dividend amount of $1.35 cents per share (5.42 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 $166,814 or around 1,107 shares. For a more modest $100 per month or $1,200 per year, you would need $33,302 or around 221 shares.
To calculate: Divide the desired annual income ($6,000 or $1,200) by the dividend ($5.42 in this case). So, $6,000 / $5.42 = 1,107 ($500 per month), and $1,200 / $5.42 = 221 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.
Price Action: Shares of Pepsi fell 0.8% to close at $150.69 on Friday.
Analysts expect the Purchase, New York-based company to report quarterly earnings at $1.94 per share, up from $1.78 per share in the year-ago period.
PepsiCo projects quarterly revenue of $27.89 billion, compared to $27.85 billion a year earlier, according to data from Benzinga Pro.
On Jan. 29, RBC Capital analyst Nik Modi reiterated PepsiCo with a Sector Perform rating and maintained a $172 price target.
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