How To Earn $500 A Month From Nvidia Stock Following Strong Earnings Report

Zinger Key Points
  • A more conservative goal of $100 monthly dividend income would require owning 3,000 shares of Nvidia.
  • An investor would need to own $17,223,750 worth of Nvidia to generate a monthly dividend income of $500.

NVIDIA Corporation NVDA shares closed slightly higher during Wednesday's session, continuing its rally.

The chipmaker giant's stock has gained every trading session since releasing its stronger-than-expected earnings report last Wednesday. Since then, shares of Nvidia has jumped around 21%.

On May 22, Nvidia reported better-than-expected financial results for its first quarter and issued strong guidance for the second quarter. The company announced a 10-for-1 stock split and raised its quarterly dividend by 150%.

The megacap tech name has seen an astounding 186% surge since the end of May 2023, fueled by skyrocketing demand for chips in artificial intelligence development.

With the recent buzz around Nvidia, some investors may be eyeing potential gains from the company's dividends too. As of now, Nvidia offers an annual dividend yield of 0.03%, which is a quarterly dividend amount of 10 cents per share (40 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 $17,223,750 or around 15,000 shares. For a more modest $100 per month or $1,200 per year, you would need $3,444,750 or around 3,000 shares.

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To calculate: Divide the desired annual income ($6,000 or $1,200) by the dividend ($0.40 in this case). So, $6,000 / $0.40 = 15,000 ($500 per month), and $1,200 / $0.40 = 3,000 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.

NVDA Price Action: Shares of Nvidia gained 0.8% to close at $1,148.25 on Wednesday.

Read More: Jim Cramer Recommends Buying Apple, Finds This Tech Stock ‘Very Interesting

Photo: Shutterstock

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