Benzinga - Despite the recent volatility in regional bank stocks, some are still worth considering for their attractive valuation and dividend yield. KeyCorp (NYSE: KEY), for instance, caught the attention of analysts including Citigroup and DA Davidson, who rate the stock as a Buy.
Morning Star's Eric Compton, an analyst covering KeyCorp, recently updated his projections for the bank and reaffirmed his $21 fair value estimate. While the bank is facing some earnings pressure, Compton believes it is manageable and that the market may have overreacted in pricing in the risks. In his view, KeyCorp's shares remain materially undervalued and offer an attractive investment opportunity.
KeyCorp's current dividend yield is around 7%, which is higher than the average for the S&P 500 Index.
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So how much KeyCorp would an investor need to own to yield say, $100 per month in dividends?
For an investor interested in knowing how much stock they’d need to own to yield $100 per month, they would have to multiply 100 by 12 (for each month in the year).
With $1,200 being the result, the investor would then divide 1,200 by KeyCorp’s dividend yield, which is 7.36%.
It would look something like this: 1200/0.0736
With that being said, an investor would need to own $16,304, or 1,457 shares of KeyCorp to yield $100 per month in dividends.
And, with the stock being down 36% year to date, there is potential for upside in the shares as well.
Additionally, if the investor wanted to yield $200 per month in KeyCorp dividends, they would need to own $32,608 or 2,914 shares.
Though it should be known 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.
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.
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