How To Earn $500 A Month From HP Stock After Weak Earnings Forecast

Zinger Key Points
  • An investor would need to own $167,363 worth of HP to generate a monthly dividend income of $500.
  • A more conservative goal of $100 monthly dividend income would require owning 1,143 shares of HP.

HP Inc. HPQ reported in-line earnings for its third quarter this week, but lowered its earnings forecast for the full year.

HP reported quarterly earnings of 86 cents per share which beat the analyst consensus estimate of 80 cents, a 17.31% decrease over earnings of $1.04 per share from the same period last year. The company reported quarterly sales of $13.20 billion which beat the analyst consensus estimate of $12.39 billion, a 9.98% decrease over sales of $14.66 billion from the same period last year.

The company issued fourth-quarter earnings per share guidance in a range between 85 cents and 97 cents, versus the previous estimate of 95 cents. Full-year 2023 earnings per share are estimated to be between $3.23 and $3.35, versus the $3.37 estimate.

Following the release of earnings, several analysts, including, B of A Securities, Morgan Stanley, JP Morgan, Barclays, Deutsche Bank and Citigroup, lowered their price targets on the stock

With the buzz around HP, some investors may be eyeing potential gains from the company’s dividends. As of now, HP offers an annual dividend yield of 3.35%, which is a quarterly dividend amount of $0.2625 a share ($1.05 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 $167,363 or around 5,714 shares. For a more modest $100 per month or $1,200 per year, you would need $33,478 or around 1,143 shares.

To calculate: Divide the desired annual income ($6,000 or $1,200) by the dividend (1.05 in this case). So, $6,000 / 1.05 = 5,714 shares ($500 per month), and $1,200 / 1.05= 1,143 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.

HPQ Price Action: Shares of HP fell 6.6% to close at $29.29 on Wednesday.

Read This Next: Wall Street's Most Accurate Analysts Say Buy These 3 Tech Stocks With Over 3% Dividend Yields

Photo: Shutterstock

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