How To Earn $500 A Month From Bank of America Stock Ahead Of Q4 Earnings Report

Zinger Key Points
  • An investor would need to own $213,500 worth of Bank of America to generate a monthly dividend income of $500.
  • A more conservative goal of $100 monthly dividend income would require owning 1,250 shares of Bank of America.

Bank of America Corporation BAC is expected to release earnings results for its fourth quarter before the opening bell on Jan. 12, 2024.

Analysts expect the bank to report quarterly earnings at 67 cents per share on revenue of $23.92 billion, according to data from Benzinga Pro.

Bank of America, during October, reported better-than-expected earnings for its third quarter. Revenue increased 3% year-over-year to $25.32 billion, beating the consensus of $25.14 billion.

With the recent buzz around Bank of America, some investors may be eyeing potential gains from the company’s dividends too. As of now, Bank of America offers an annual dividend yield of 2.81%, which is a quarterly dividend amount of 24 cents per share (96 cents 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 $213,500 or around 6,250 shares. For a more modest $100 per month or $1,200 per year, you would need $42,700 or around 1,250 shares.

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To calculate: Divide the desired annual income ($6,000 or $1,200) by the dividend ($0.96 in this case). So, $6,000 / $0.96 = 6,250 ($500 per month), and $1,200 / $0.96 = 1,250 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.

BAC Price Action: Shares of Bank of America fell 0.8% to close at $34.16 on Monday.

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