Toll Brothers, Inc. (NYSE:TOL) has maintained regular dividend payments since 2017 and has increased its dividend payout annually for six consecutive years.

Ahead of the company’s third quarter earnings report after the closing bell on Tuesday, Aug. 18, some investors may be eyeing potential gains from those dividends. Currently, Toll Brothers has an annual dividend yield of 0.70%, which is a quarterly dividend amount of 26 cents per share ($1.04 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 $856,870 or around 5,769 shares. For a more modest $100 per month or $1,200 per year, you would need $171,404 or around 1,154 shares.

To calculate: Divide the desired annual income ($6,000 or $1,200) by the dividend ($1.04 in this case). So, $6,000 / $1.04 = 5,769 ($500 per month), and $1,200 / $1.04 = 1,154 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.

Price Action

Shares of Toll Brothers fell 2.9% to close at $148.53 on Wednesday.

Analysts expect the company to report quarterly earnings of $2.93 per share, down from $3.73 per share in the year-ago period. The consensus estimate for TOL’s quarterly revenue is $2.62 billion. It reported $2.95 billion last year, according to Benzinga Pro.

Barclays analyst Matthew Bouley, on July 14, maintained Toll Brothers with an Underweight rating and raised the price target from $115 to $122.

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