Some investors may be eyeing potential gains from dividends of Bath & Body Works, Inc. (NYSE:BBWI) when the retailer releases first-quarter earnings before the opening bell on Wednesday, May 27.

As of now, Bath & Body Works has an annual dividend yield of 4.50%, with a quarterly dividend amount of 20 cents per share (80 cents a year).  

So, how can investors use its dividend yield to pocket a regular $500 per month?

To earn $500 per month or $6,000 annually from dividends alone, you would need an investment of approximately $133,200 or around 7,500 shares. For a more modest $100 per month or $1,200 per year, you would need $26,640 or around 1,500 shares.

To calculate: Divide the desired annual income ($6,000 or $1,200) by the dividend ($0.80 in this case). So, $6,000 / $0.80 = 7,500 ($500 per month), and $1,200 / $0.80 = 1,500 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: Compute the dividend yield 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 dividend payments can affect the yield. If a company increases its dividend, its yield will also increase, provided the stock price remains unchanged. Conversely, if the dividend payment decreases, so will the yield.

Price Action

Shares of Bath & Body Works rose 2.5% to close at $17.76 on Friday.

Analysts expect the company to report quarterly earnings of 29 cents per share. That’s down from 49 cents per share in the year-ago period. The consensus estimate for Bath & Body Works' quarterly revenue is $1.36 billion (it reported $1.42 billion last year), according to Benzinga Pro.

Ahead of quarterly earnings, UBS analyst Jay Sole, on May 20, maintained Bath & Body Works with a Neutral and lowered the price target from $22 to $19.

Photo via Shutterstock