McDonald's Corporation (NYSE:MCD) just declared a quarterly cash dividend of $1.67 per share of common stock payable on Sept. 17 to shareholders of record on Sept. 3.
With the recent buzz around the Chicago fast food chain, some investors may be eyeing potential gains from the company's dividends, too. As of now, McDonald's offers an annual dividend yield of 2.66%. That's a quarterly dividend amount of $1.67 per share ($6.68 a year).
So, how can investors exploit its dividend yield to pocket a regular $500 monthly?
To earn $500 per month or $6,000 annually from dividends alone, you would need an investment of approximately $225,811 or around 898 shares. For a more modest $100 per month or $1,200 per year, you would need $45,263 or around 180 shares.
Read This: Top 3 Defensive Stocks That Are Ticking Portfolio Bombs
To calculate: Divide the desired annual income ($6,000 or $1,200) by the dividend ($6.68 in this case). So, $6,000 / $6.68 = 898 ($500 per month), and $1,200 / $6.68 = 180 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.
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.
MCD Price Action: Shares of McDonald's fell 0.8% to close at $251.46 on Thursday.
What's Next: The company will release its second-quarter financial results, before the opening bell on Monday, July 29. Analysts expect quarterly earnings at $3.07 per share. That's down from $3.17 per share in the year-ago period.
McDonald's expects to post revenue of $6.61 billion, compared to $6.27 billion a year earlier, according to data from Benzinga Pro.
- Wall Street's Most Accurate Analysts Say Hold These 3 Utilities Stocks With Over 5% Dividend Yields