How To Earn $500 Per Month From PepsiCo (NASDAQ: PEP) Stock

PepsiCo, Inc. PEP closed at $168.90 on Dec. 1, 2023. The New York-headquartered food and beverage company has a market capitalization of $232.2 billion.

PepsiCo's yield is 2.99%, and the dividend payout is $5.04. The American multinational company filed its 10-Q report on Oct. 10, 2023. In the 12 weeks ending on Sept. 9, 2023, the company declared dividend expenses of $1,748 million, 9.7% higher than the same period in the preceding year. For the 36 weeks that ended on Sept. 9, 2023, the cumulative dividend expenses were $5,093 million, 8.7% higher than the dividend payment for the same period in 2022.

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Earning $500 Per Month With Your PepsiCo Investment

If you want to earn $500 per month ($6,000 annually) from PepsiCo dividends, your investment value should be $200,669. At $168.90 a common share, you will have around 1,188 shares of PepsiCo. If you are considering a moderate earnings target of $100 per month ($1,200 annually), your investment value reduces to $40,134 or 238 shares.

Calculate your investment value with the help of dividend yield: You can determine an approximate investment value based on two factors. One is your desired annual income of either $6,000 or $1,200. The second is the dividend yield of the stock. The dividend yield is calculated by dividing the annual dividend payments by the market price per common share. 

If you want to earn $500 per month, your investment value will be the annual earnings target of  $6,000 divided by the dividend yield of 2.99% ($6,000/0.0299 = $200,669). When the earnings expectation is $100 per month or $1,200 per year, the calculation will be $1,200/0.0299 or $40,134.

Important note: The dividend yield can change over time because of the movement in stock prices or a change in the dividend payments. The above estimations assume that the stock price is constant. If there is an appreciation in stock price, the dividend yield decreases and vice versa. So, the dividend yield and the stock price are inversely correlated. 

Take a numerical example for clarity. If a stock pays $2 as an annual dividend and is priced at $50, its dividend yield would be $2/$50 or 4%. When the stock price appreciates to $60, the dividend yield declines to 3.33% ($2/$60). When the stock price dips to $40, the dividend yield rises to 5% ($2/$40).

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