Generating a steady income stream through dividend-paying stocks can be an attractive strategy for investors. With Verizon Communications Inc.’s (NYSE:VZ) recent announcement to acquire Frontier Communications Parent, Inc. (NASDAQ:FYBR) for $20 billion, investors may be eyeing the potential benefits of its dividend yield. Currently, Verizon offers an annual dividend yield of 6.02%, translating to a quarterly dividend of 67.75 cents per share or $2.71 annually.
To tap into this dividend yield and pocket a regular $500 monthly income, investors would need to invest approximately $99,741, equivalent to around 2,214 shares. For a more modest $100 monthly income, an investment of around $19,957 or 443 shares would be required.
The calculation is straightforward: simply divide the desired annual income by the dividend amount. In this case, $6,000 / $2.71 = 2,214 shares for a $500 monthly income, and $1,200 / $2.71 = 443 shares for a $100 monthly income.
It’s essential to note that dividend yields can fluctuate over time due to changes in the dividend payment and stock price. 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 is currently priced at $50, the dividend yield would be 4%. However, if the stock price increases to $60, the dividend yield drops to 3.33%, and if it falls to $40, the dividend yield rises to 5%.
Similarly, changes in the dividend payment can impact the yield. An increase in the dividend payment would boost the yield, provided the stock price remains constant, while a decrease in the dividend payment would lead to a lower yield.
In recent market activity, shares of Verizon fell 0.4% to close at $45.05 on Wednesday. Analyst Ivan Feinseth of Tigress Financial maintained a Buy rating on Verizon and raised the price target from $52 to $55 on October 1.
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