Bank of America Corporation (BAC) currently offers an enticing annual dividend yield of 2.6%, translating to a quarterly dividend of 26 cents per share, or $1.04 annually. If you’re aiming for a monthly dividend income of $500 from this Charlotte, North Carolina-based financial giant, you’ll need to set a yearly target of $6,000 ($500 x 12 months).
To achieve this, divide your yearly target by Bank of America’s annual dividend per share: $6,000 / $1.04 = 5,769 shares. So, you’d need to own approximately 5,769 shares of Bank of America, representing an investment of around $230,587, to generate that $500 monthly dividend income.
Now, if you’re aiming for a more conservative goal of $100 monthly, or $1,200 annually, the same calculation applies: $1,200 / $1.04 = 1,154 shares. This equates to an investment of $46,125 to achieve a monthly dividend income of $100.
It’s important to note that dividend yield is a dynamic figure that fluctuates with both dividend payments and stock price changes. The dividend yield is calculated by dividing the annual dividend payment by the current stock price.
For instance, if a stock 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 drop to 3.33% ($2/$60). Conversely, if the stock price falls to $40, the dividend yield would increase to 5% ($2/$40).
Furthermore, the dividend payment itself can be adjusted over time, impacting the dividend yield. A company increasing its dividend payment will boost the dividend yield, even if the stock price remains unchanged. Conversely, a decrease in dividend payments will lower the yield.
In recent price action, Bank of America shares dipped by 0.6% on Thursday, closing at $39.97. The company is scheduled to release its earnings results for the third quarter before the opening bell on Tuesday, October 15. Analysts anticipate Bank of America to report quarterly earnings of 77 cents per share, down from 90 cents per share in the same period last year. Based on data from Benzinga Pro, Bank of America is projected to report revenue of $25.29 billion for the recent quarter.
On October 9, RBC Capital analyst Gerard Cassidy reaffirmed his Outperform rating for Bank of America and maintained a $46 price target.
