With the recent buzz around Smithfield Foods, including its recent January acquisition of Nathan's Famous, Inc. (NASDAQ:NATH),some investors may be eyeing potential gains from the company's dividends too. As of now, Smithfield Foods has an annual dividend yield of 4.33%, with a quarterly dividend of 25 cents per share ($1.00 per 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 $138,660 or around 6,000 shares. For a more modest $100 per month or $1,200 per year, you would need $27,732 or around 1,200 shares.
To calculate: Divide the desired annual income ($6,000 or $1,200) by the dividend ($1.00 in this case). So, $6,000 / $1.00 = 6,000 ($500 per month), and $1,200 / $1.00 = 1,200 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: Compute the dividend yield 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.
SFD Price Action: Shares of Smithfield Foods fell 1.9% to close at $23.11 on Thursday.
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