Shares of Pfizer Inc (NYSE:PFE) are trading at 52-week lows as investors adjust to the company’s pursuit of a candidate for a weight loss pill, marking its entry into the competitive obesity drug market.
The Street responded critically. JPMorgan Chase & Co (NYSE:JPM) analysts called the news a setback for the company. Lotiglipron — the disregarded candidate — was expected to be the stronger contender.
Meanwhile, SVB Securities labeled the decision “incrementally negative,” according to Yahoo! Finance.
Still, Pfizer is pressing on with its plan to advance the twice-daily pill while also researching a once-daily variant. And Pfizer’s dividend yield stands out — a robust 4.56%.
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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 $131,579, or 3,635 shares. For a more modest $100 per month or $1,200 per year, you would need $26,315, or 727 shares.
To calculate: Divide the desired annual income ($6,000 or $1,200) by the dividend yield (0.046 in this case). So, $6,000 / 0.0456 = $131,579 ($500 per month), and $1,200 / 0.0456 = $26,315 ($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.
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