AT&T Inc. (NYSE:T), once a darling of blue chip investors, is currently trading near multi-decade lows. Despite the telecommunications giant’s beleaguered stock price, investors may have the opportunity to capitalize on both potential capital appreciation and its dividends.
Chief Financial Officer of AT&T Pascal Desroches recently reassured investors about the financial health of the company in Bank of America Corp (NYSE:BAC) C-Suite Conference on Technology, Media and Telecommunications.
Desroches reiterated AT&T’s free cash flow target of $16 billion or more for 2023. Projected free cash flow, combined with AT&T’s trading at levels near all-time lows, could present an opportunity attractive to investors looking for yield.
With the current dividend yield of around 7.66%, how can an investor earn $500 a month from the stock?
The $500 monthly goal translates to $6,000 per year ($500 x 12 months).
Check:
Dividing the $6,000 by AT&T’s 7.66% dividend yield, we get: $6,000 / 0.0766 = $81,855.38.
So, to earn $500 per month, an investor would need to own $78,328.98 of AT&T or 5,651 shares.
Keep in mind that while AT&T’s stock price is near its multi-decade low, potential capital gains could supplement its dividends.
Assuming a more modest goal of $100 per month ($1,200 per year), we do the same calculation: $1,200 / 7.66% = $15,665.80, or 1,130 shares.
Note that the dividend yield can change continuously, as the dividend payment and the stock price both fluctuate over time.
Dividend yield is calculated by dividing the annual dividend payment by the current share price. As the stock price changes, the dividend yield will also change.
For example, if a stock pays an annual dividend of $2 and its current price is $50, its dividend yield would be 4%. However, if the stock price increased to $60, the dividend yield would decrease to 3.33% ($2/$60).
Conversely, if the stock price drops to $40, the dividend yield will increase to 5% ($2/$40).
Additionally, the dividend payment itself may also change over time, which may also impact the dividend yield. If a company increases its dividend payment, the dividend yield will increase even if the stock price remains the same. Similarly, if a company decreases its dividend payment, the dividend yield will decrease.
Read next:
Send to MSN: 0
Don’t miss real-time alerts on your actions – join Benzinga Pro for free! Try the tool that will help you invest smarter, faster and better.
This article How to Earn $500 a Month from AT&T Stock originally appeared on Benzinga.com
.
© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.