Benzinga - by Priya Nigam, Benzinga Staff Writer.
Paychex Inc (NASDAQ: PAYX) on Wednesday reported better-than-expected earnings for its first quarter.
Paychex reported first-quarter FY24 sales growth of 7% year-on-year to $1.286 billion, slightly missing the analyst consensus estimate of $1.29 billion. Adjusted EPS of $1.14 beat the analyst consensus estimate of $1.12.
Paychex revised its FY24 adjusted EPS growth outlook from 9%-10% to 9%-11%. The company's forecast for total revenue to grow in the range of 6% to 7% remains unchanged.
With the buzz around Paychex following quarterly results, some investors may be eyeing potential gains from the company’s dividends. As of now, Paychex offers an annual dividend yield of 2.88%, which is a quarterly dividend amount of $0.89 a share ($3.36 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 $208,087 or around 1,786 shares. For a more modest $100 per month or $1,200 per year, you would need $41,594 or around 357 shares.
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To calculate: Divide the desired annual income ($6,000 or $1,200) by the dividend (3.36 in this case). So, $6,000 / 3.36= 1,786 ($500 per month), and $1,200 / 3.36= 357 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.
PAYX Price Action: Shares of Paychex rose 3.4% to close at $116.51 on Wednesday.
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