Zinger Key Points
- A more conservative goal of $100 monthly dividend income would require owning 508 shares of Broadcom.
- An investor would need to own $663,665 worth of Broadcom to generate a monthly dividend income of $500.
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Broadcom Inc. AVGO will release its second-quarter financial results after the closing bell on Thursday, June 5.
Some investors may be eyeing potential gains from the Palo Alto, California-based company's dividends. Currently, Broadcom offers an annual dividend yield of 0.90%. That’s a quarterly dividend amount of 59 per share ($2.36 a year).
To figure out how to earn $500 monthly from Broadcom, we start with a yearly target of $6,000 ($500 x 12 months).
Next, we take this amount and divide it by Broadcom's $2.36 dividend: $6,000 / 2.36 = 2,542 shares.
So, an investor would need to own approximately $663,665 worth of Broadcom, or 2,542 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 / $2.36 = 508 shares, or $132,629 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).
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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 gained by 1.7% to close at $261.08 on Wednesday.
Analysts expect Broadcom to report quarterly earnings at $1.57 per share, up from $1.10 per share in the year-ago period. Broadcom projects quarterly revenue of $14.97 billion, compared to $12.49 billion a year earlier, according to data from Benzinga Pro.
The company beat analyst estimates in the first quarter and has beaten analyst estimates for revenue in eight of the last 10 quarters overall
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