Benzinga - by Avi Kapoor, Benzinga Staff Writer.
Pfizer Inc. (NYSE: PFE) shares closed slightly higher on Wednesday.
The New York-based pharmaceutical giant recently said that the European Commission approved PREVNAR 20, a caccine to help protect infants and children against pneumococcal disease.
On Jan. 30, Pfizer reported a surprise profit for the fourth quarter, with adjusted EPS of 10 cents versus a consensus loss of 22 cents. The company reported a 41% decline in sales to $14.25 billion, down from $24.3 billion a year ago.
Some investors may be eyeing potential gains from Pfizer’s dividends, too. The company currently offers an annual dividend yield of 5.95%, which is a quarterly dividend amount of 42 cents per share ($1.68 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 $100,774 or around 3,571 shares. For a more modest $100 per month or $1,200 per year, you would need $20,149 or around 714 shares.
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To calculate: Divide the desired annual income ($6,000 or $1,200) by the dividend ($1.68 in this case). So, $6,000 / $1.68 = 3,571 ($500 per month), and $1,200 / $1.68 = 714 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.
PFE Price Action: Shares of Pfizer gained 0.8% to close at $28.22 on Wednesday.
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