How To Earn $500 A Month From Cardinal Health Stock Ahead Of Q4 Earnings

Cardinal Health, Inc. CAH will release earnings results for the fourth quarter before the opening bell on Tuesday, Aug. 12.

Analysts expect the health care company to report quarterly earnings at $2.03 per share, up from $1.84 per share in the year-ago period. Cardinal Health projects to report quarterly revenue of $60.92 billion, compared to $59.87 billion a year earlier, according to data from Benzinga Pro.

With the recent buzz around Cardinal Health, some investors may be eyeing potential gains from the company's dividends. Currently, the company offers an annual dividend yield of 1.30%—a quarterly dividend amount of 51 cents per share. That amounts to about $2.04 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 $462,313 or around 2,937 shares. For a more modest $100 per month or $1,200 per year, you would need $92,400 or around 587 shares.

To calculate: Divide the desired annual income ($6,000 or $1,200) by the dividend ($2.04 in this case). So, $6,000 / $2.04 = 2,937 ($500 per month), and $1,200 / $2.04 = 587 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.

CAH Price Action: Shares of Cardinal Health gained 2.6% to close at $157.41 on Friday.

On July 16, Morgan Stanley analyst Erin Wright maintained Cardinal Health with an Overweight rating and raised the price target from $181 to $190.

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