Shares of NVIDIA Corporation (NASDAQ:NVDA) topped the $500 mark in pre-market trading on Thursday after the company reported better-than-expected second-quarter financial results and issued strong revenue guidance for the third quarter.
Shares of several semiconductor and AI-related stocks also traded higher in sympathy with NVIDIA.
NVIDIA’s Data Center revenue surged to a record and accounted for roughly two-thirds of the total. The company’s board also approved an additional $25 billion in share repurchases.
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 $20,000,000, or around 32,293 shares. For a more modest $100 per month or $1,200 per year, you would need $4,000,000, or around 7,859 shares.
To calculate: Divide the desired annual income ($6,000 or $1,200) by the dividend yield (0.03% in this case). So, $6,000 / 0.03% = $20,000,000 ($500 per month), and $1,200 / 0.03%= $4,000,000 ($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.
NVDA Price Action: Shares of Nvidia jumped 6.7% to $503.00 in pre-market trading on Thursday.
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