How To Earn $500 A Month From Bank of America Stock Ahead Of Q3 Earnings

Bank of America Corporation (NYSE:BAC) will release earnings results for the third quarter before the opening bell on Wednesday, Oct. 15.

Analysts expect the bank to report quarterly earnings at 95 cents per share, up from 81 cents per share in the year-ago period. Bank of America is projected to report quarterly revenue of $27.38 billion, compared to $25.34 billion a year earlier, according to data from Benzinga Pro.

On Oct. 7, UBS analyst Erika Najarian maintained a Buy rating for Bank of America and raised the price target from $55 to $57.

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 2.29%, which is a quarterly dividend amount of 28 cents per share ($1.12 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 $261,743 or around 5,357 shares. For a more modest $100 per month or $1,200 per year, you would need $52,329 or around 1,071 shares.

To calculate: Divide the desired annual income ($6,000 or $1,200) by the dividend ($1.12 in this case). So, $6,000 / $1.12 = 5,357 ($500 per month), and $1,200 / $1.12 = 1,071 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 rose 0.4% to close at $48.86 on Monday.

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