On Sept. 5, Broadcom Inc. (NASDAQ:AVGO) reported stronger-than-expected earnings and sales results for its third quarter.
The company's quarterly revenue of $13.072 billion, beating analyst estimates of $12.96 billion, according to Benzinga Pro. The semiconductor company reported second-quarter earnings of $1.24 per share, beating analyst estimates of $1.20 per share.
With the recent buzz around Broadcom, some investors may be eyeing potential gains from the company's dividends. As of now, Broadcom has a dividend yield of 1.34%. That's a quarterly dividend amount of 53 cents a share ($2.12 a year).
To figure out how to earn $500 monthly from Broadcom, we start with the yearly target of $6,000 ($500 x 12 months).
Next, we take this amount and divide it by Broadcom's $2.12 dividend: $6,000 / $2.12 = 2,830 shares
So, an investor would need to own approximately $465,705 worth of Broadcom, or 2,830 shares to generate a monthly dividend income of $500.
Assuming a more conservative goal of $100 monthly ($1,200 annually), we do the same calculation: $1,200 / $2.12 = 566 shares, or $93,141 to generate a monthly dividend income of $100.
Note that dividend yield can change on a rolling basis, as the dividend payment and the stock price both fluctuate over time.
The dividend yield is calculated by dividing the annual dividend payment by the current stock price. As the stock price changes, the dividend yield will also change.
For example, if a stock pays an annual dividend of $2 and its current price is $50, its dividend yield would be 4%. However, if the stock price increases to $60, the dividend yield would decrease to 3.33% ($2/$60).
Conversely, if the stock price decreases to $40, the dividend yield would increase to 5% ($2/$40).
Further, the dividend payment itself can also change over time, which can also impact the dividend yield. If a company increases its dividend payment, the dividend yield will increase even if the stock price remains the same. Similarly, if a company decreases its dividend payment, the dividend yield will decrease.
AVGO Price Action: Shares of Broadcom rose 4% to close at $164.56 on Thursday.
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