Next, we take this amount and divide it by Goldman Sachs’ $12.00 dividend: $6,000 / $12.00 = 500 shares
Investors would need to own 500 Goldman Sachs shares ($258,150 worth) to generate a monthly dividend income of $500.
Assuming a more conservative goal of $100 monthly ($1,200 annually), we do the same calculation: $1,200 / $12.00 = 100 shares, or $51,630 to generate a monthly dividend income of $100.
Note that dividend yield can change on a rolling basis, as the dividend payment and the stock price both fluctuate over time.
The dividend yield is calculated by dividing the annual dividend payment by the current stock 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 increases to $60, the dividend yield would decrease to 3.33% ($2/$60).
Conversely, if the stock price decreases to $40, the dividend yield would increase to 5% ($2/$40).
Further, the dividend payment itself can also change over time, which can 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.
Price Action: Shares of Goldman gained by 2.5% to close at $516.30 on Friday.
On Oct. 9, JMP Securities analyst Devin Ryan maintained Goldman Sachs with a Market Outperform and raised the price target from $525 to $550.
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