Benzinga - by AJ Fabino, Benzinga Staff Writer. Shares of Target Corp (NYSE:TGT) traded higher into Wednesday's trading session after the company issued its second-quarter earnings.
Here's what investors need to know about the print, and how to earn $500 a month from the stock.
By The Numbers: The Minneapolis, Minnesota-based retail giant issued adjusted earnings of $1.80 per share, which came ahead of the $1.39 expectation, on revenues of $24.77 billion, which missed the $25.18-billion consensus estimate. Target said sales were down 4.9% year over year.
Its comparable sales were down by 5.4%, a mix of a 4.3% decline in comparable store sales and a surprising 10.5% decrease in its digital sales.
But it wasn’t all somber news — Target's gross margin expanded to 27%, thanks to a combination of fewer markdowns, inventory-related savings and lower digital fulfillment and supply chain costs. Further, Target’s operating income leaped 273% to $1.2 billion with a margin rate of 4.8%.
“Our leaner inventory position compared to last year enabled us to adjust to changing topline trends, all while prioritizing our guests,” CEO Brian Cornell said.
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So how would you earn $500 a month from its stock? Dividends.
In the second quarter, Target issued $499 million in dividends, a notable increase from the $417 million the previous year. And as the earnings show some turbulence, the silver lining for dividend lovers is evident.
For those intrigued by the idea of monthly dividend income, diving into the math is necessary.
To generate a monthly dividend check of $500 from Target, given its current dividend yield of 3.41%, you would need to make a hefty investment. Specifically, $175,953.08, or about 1,371 shares.
If you're aiming for a more modest dividend income, investing around $35,191, or 274 shares, would generate an extra $100 per month.
Note that the 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.
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).
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.
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