NVIDIA Corporation (NASDAQ:NVDA) shares closed slightly higher during Wednesday’s session, continuing its rally.
The chipmaker giant’s stock has gained every trading session since releasing its stronger-than-expected earnings report last Wednesday. Since then, shares of Nvidia has jumped around 21%.
On May 22, Nvidia reported better-than-expected financial results for its first quarter and issued strong guidance for the second quarter. The company announced a 10-for-1 stock split and raised its quarterly dividend by 150%.
The megacap tech name has seen an astounding 186% surge since the end of May 2023, fueled by skyrocketing demand for chips in artificial intelligence development.
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With the recent buzz around Nvidia, some investors may be eyeing potential gains from the company’s dividends too. As of now, Nvidia offers an annual dividend yield of 0.03%, which is a quarterly dividend amount of 10 cents per share (40 cents a 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 $17,223,750 or around 15,000 shares. For a more modest $100 per month or $1,200 per year, you would need $3,444,750 or around 3,000 shares.
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To calculate: Divide the desired annual income ($6,000 or $1,200) by the dividend ($0.40 in this case). So, $6,000 / $0.40 = 15,000 ($500 per month), and $1,200 / $0.40 = 3,000 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: 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).
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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.
NVDA Price Action: Shares of Nvidia gained 0.8% to close at $1,148.25 on Wednesday.
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