NRG Energy, Inc. (NYSE:NRG) will release earnings results for the first quarter, before the opening bell on Monday, May 12.
Analysts expect the Houston-based company to report quarterly earnings at $1.67 per share, up from 90 cents per share in the year-ago period. And, on May 5, Jefferies analyst Julien Dumoulin-Smith maintained NRG Energy with a Buy rating and raised the price target from $113 to $132.
With the recent buzz around NRG Energy, some investors may be eyeing potential gains from the company's dividends. Currently, NRG Energy offers an annual dividend yield of 1.46%. That’s a quarterly dividend amount of 44 cents per share ($1.76 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 $410,239 or around 3,409 shares. For a more modest $100 per month or $1,200 per year, you would need $82,072 or around 682 shares.
To calculate: Divide the desired annual income ($6,000 or $1,200) by the dividend ($1.76 in this case). So, $6,000 / $1.76 = 3,409 ($500 per month), and $1,200 / $1.76 = 682 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).
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.
NRG Price Action: Shares of NRG Energy gained 1.4% to close at $120.34 on Thursday.
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