Costco Wholesale Corporation (COST) is gearing up to release its fourth-quarter earnings after the closing bell on Thursday. Analysts are expecting the bulk retailer to deliver strong results, with projected earnings per share of $5.08, a significant jump from $4.86 a year ago. Revenue is also anticipated to rise to $79.97 billion compared to $78.94 billion in the previous year, according to Benzinga Pro.
While Costco’s low prices are a major draw for shoppers, investors are also eyeing the company’s potential for dividend income. As of now, Costco boasts a dividend yield of 0.51%, translating to a quarterly dividend of $1.16 per share, or $4.64 annually.
But how much Costco stock would you need to own to generate a substantial income from dividends? Let’s break it down.
Dreaming of a $500 Monthly Dividend?
To reach a yearly target of $6,000 ($500 x 12 months), you would need to divide that amount by Costco’s annual dividend: $6,000 / $4.64 = 1,293 shares. This translates to approximately $1,174,587 worth of Costco stock, or a whopping 150,000 shares.
A More Conservative Approach: $100 Monthly
For a more modest goal of $100 monthly ($1,200 annually), the calculation becomes: $1,200 / $4.64 = 259 shares, or $235,281 worth of Costco stock.
Important Notes:
* It’s crucial to remember that dividend yields can fluctuate. Both dividend payments and stock prices can change over time, impacting the dividend yield.
* The dividend yield is calculated by dividing the annual dividend payment by the current stock price. For instance, if a company pays an annual dividend of $2 and its current price is $50, the dividend yield would be 4%. However, if the stock price rises to $60, the dividend yield would decrease to 3.33%. Conversely, if the stock price drops to $40, the dividend yield would increase to 5%.
* Companies can also adjust their dividend payments, affecting the dividend yield. Increasing the dividend payment would raise the yield, while decreasing it would lower the yield, even if the stock price remains unchanged.
Costco’s Stock Performance:
As of Wednesday, Costco shares gained 0.8% to close at $908.42.
While Costco’s dividend income potential is tempting, remember that investing involves risk. It’s crucial to thoroughly research and understand the company’s financial performance and future prospects before making any investment decisions.
