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General Dynamics Corporation will release its second-quarter earnings report before the opening bell on Wednesday, July 29.
Some of the company’s investors may be eyeing potential gains from its dividends. Currently, General Dynamics has an annual dividend yield of 1.63% — a quarterly dividend amount of $1.59 per share ($6.36 a year).
So, how can investors exploit its dividend yield to pocket a regular $500 monthly?
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To earn $500 per month or $6,000 annually from dividends alone, you would need an investment of approximately $366,959 or around 943 shares. For a more modest $100 per month or $1,200 per year, you would need $73,547 or around 189 shares.
To calculate: Divide the desired annual income ($6,000 or $1,200) by the dividend ($6.36 in this case). So, $6,000 / $6.36 = 943 ($500 per month), and $1,200 / $6.36 = 189 shares ($100 per month).
Note that dividend yield can change on a rolling basis, as the dividend payment and the stock price both fluctuate over time.
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How that works: The dividend yield is computed by dividing the annual dividend payment by the stock’s current price.
For example, 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 impact the yield. If a company increases its dividend, the yield will also increase, provided the stock price stays the same. Conversely, if the dividend payment decreases, so will the yield.
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