Benzinga - by Avi Kapoor, Benzinga Staff Writer.
Bank of America Corp (NYSE:BAC) reported better-than-expected earnings for its first quarter on April 16.
The Charlotte, North Carolina-based bank posted quarterly adjusted net income of $7.2 billion and adjusted EPS of 83 cents, beating the consensus of 77 cents. Revenue, net of interest expense, decreased 2% year over year to $25.8 billion. Adjusted revenue declined 1.6% year over year to $25.98 billion, beating the consensus of $25.46 billion, according to data from Benzinga Pro.
On April 25, Bank of America declared a regular quarterly cash dividend of 24 cents per share, payable on June 28 to shareholders of record as of June 7.
With the recent buzz around Bank of America, some investors may be eyeing potential gains from the company's dividends. As of now, Bank of America has a dividend yield of 2.68%, which is a quarterly dividend amount of 24 cents a share (96 cents a year).
To figure out how to earn $500 monthly from Bank of America, we start with the yearly target of $6,000 ($500 x 12 months).
Next, we take this amount and divide it by Bank of America's $0.96 dividend: $6,000 / $0.96 = 6,250 shares
So, an investor would need to own approximately $223,688 worth of Bank of America, or 6,250 shares to generate a monthly dividend income of $500.
Assuming a more conservative goal of $100 monthly ($1,200 annually), we do the same calculation: $1,200 / $0.96 = 1,250 shares, or $44,738 to generate a monthly dividend income of $100.
Also Read: Over $3M Bet On Steel Connect? Check Out These 4 Stocks Insiders Are Buying
Note that 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.
For example, 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).
Further, 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.
BAC Price Action: Shares of Bank of America fell 1.5% to close at $35.79 on Monday.
Read More: Jim Cramer Likes Palantir, Recommends Pioneer Natural Resources: ‘I Want You To Ka-Ching, Ka-Ching’
Photo: Shutterstock
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.