Morgan Stanley (MS) is gearing up to unveil its third-quarter earnings results before the market opens on Wednesday, October 16th. Analysts are optimistic, projecting earnings of $1.58 per share, a significant increase from $1.38 per share in the same period last year. Revenue for the quarter is anticipated to reach $14.41 billion, according to Benzinga Pro data. This positive outlook follows strong results from other major banks, including JPMorgan Chase (JPM), Wells Fargo (WFC), and BlackRock (BLK), indicating a positive trend in the broader financial sector.
The recent buzz surrounding Morgan Stanley extends beyond its earnings performance. Investors are increasingly attracted to the company’s compelling dividend yield. Currently, Morgan Stanley offers an annual dividend yield of 3.3%, translating to a quarterly payout of 92.5 cents per share ($3.70 annually). This raises an intriguing question: how can investors leverage this dividend yield to generate consistent passive income?
Let’s delve into the specifics: to receive $500 per month, or $6,000 annually, solely from dividends, you would need to invest approximately $182,118, representing around 1,622 shares. If your goal is a more modest $100 per month, or $1,200 annually, you would need an investment of $36,379 or approximately 324 shares.
The calculation is straightforward: divide your desired annual income ($6,000 or $1,200) by the annual dividend ($3.70 in this case). Therefore, $6,000 / $3.70 = 1,622 shares ($500 per month), and $1,200 / $3.70 = 324 shares ($100 per month).
It’s important to note that dividend yields are dynamic and subject to change. Both the dividend payment and the stock price fluctuate over time, impacting the yield.
Here’s how the dividend yield works: it’s calculated by dividing the annual dividend payment by the stock’s current price. For instance, 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 affect the yield. If a company increases its dividend, the yield will also increase, provided the stock price remains unchanged. Conversely, if the dividend payment is reduced, the yield will follow suit.
In the current market, Morgan Stanley’s shares have shown strength, gaining 1.7% to close at $112.28 on Monday. As investors eagerly await the upcoming earnings report, the company’s generous dividend yield continues to attract attention, offering a potential avenue for passive income generation.
