Benzinga - by Lisa Levin, Benzinga Editor.
Energy Transfer LP (NYSE: ET) shares closed higher on Thursday as investors assessed the OPEC+ decision.
The Organization of the Petroleum Exporting Countries and its allies collectively decided to implement an additional supply cut of 1 million barrels a day, reinforcing Saudi Arabia's recent extension of its equivalent voluntary oil reduction.
On Nov. 1, Energy Transfer posted weaker-than-expected earnings for its third quarter.
With the recent buzz around Energy Transfer, some investors may be eyeing potential gains from the company’s dividends. As of now, Energy Transfer offers an annual dividend yield of 9%, which is a quarterly dividend amount of 31.25 cents per share ($1.25 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 $66,672 or around 4,800 shares. For a more modest $100 per month or $1,200 per year, you would need $13,334 or around 960 shares.
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To calculate: Divide the desired annual income ($6,000 or $1,200) by the dividend ($1.25 in this case). So, $6,000 / $1.25 = 4,800 ($500 per month), and $1,200 / $1.25 = 960 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.
ET Price Action: Shares of Energy Transfer rose 1.5% to close at $13.89 on Thursday.
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