If you’re looking to earn an extra $500 each month through dividends from The Coca-Cola Company (NYSE:KO), let’s take a look at how much you need to invest.
Snapshot of Coca-Cola money
As of January 18, Coca-Cola shares were valued at $59.70. The company, with a market value of $258 billion, had been trading between $64.99 and $51.55 over the past 52 weeks.
Checking Coca-Cola’s dividend payments
In the third quarter of 2023, Coca-Cola declared a dividend of $0.46 per share, up slightly from $0.44 in the same period in 2022. From January to September 2023, total dividends were $1.38, up from $1.32 a year earlier.
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Investment calculation for desired dividend income
To consistently earn $500 monthly in dividends, you would need to invest around $193,548 based on Coca-Cola’s current dividend yield of 3.1%. This calculation comes from dividing your annual dividend target ($6,000) by the percentage yield. For a goal of less than $200 per month, the investment would be around $77,419.
Understanding changes in dividend yield
Let’s look at how dividend yields change with stock prices in a simple example. Imagine a stock that consistently pays an annual dividend of $4. With an initial price of $100, the dividend yield is 4% ($4 divided by $100). If the stock price rises to $120 while the dividend remains at $4, the yield decreases to approximately 3.33% ($4 divided by $120). If the stock price falls to $80, the yield increases to 5% ($4 divided by $80). “This shows the relationship between dividend yields and share prices, assuming the dividend amount remains the same.”
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