As Darden Restaurants, Inc (NYSE:DRI) prepares to release its fiscal first-quarter earnings report before the opening bell on Thursday, Sept. 24, investors may be eyeing potential gains from the company’s dividends.
Currently, the restaurant chain operator offers an annual dividend yield of 3.03%, with a quarterly dividend of $1.62 per share ($6.48 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 about $197,738, or around 926 shares. For a more modest $100 per month or $1,200 per year, you would need $39,505 or around 185 shares.
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To calculate: Divide the desired annual income ($6,000 or $1,200) by the dividend ($6.48 in this case). So, $6,000 / $6.48 = 926 ($500 per month), and $1,200 / $6.48 = 185 shares ($100 per month).
Note that dividend yield can change on a rolling basis, as dividend payments and stock prices 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 dividend payments can affect 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, the yield will too.
DRI Price Action
Shares of Darden Restaurants gained 1.1% to close at $213.54 on Tuesday.
Analysts expect the company, which owns Olive Garden and LongHorn Steakhouse, to report quarterly earnings of $2.05 per share. That’s up from $1.97 per share in the year-ago period. The consensus estimate for DRI’s quarterly revenue is $3.21 billion. It reported $3.04 billion last year, according to Benzinga Pro.
Ahead of quarterly earnings, Seaport Global analyst Eric Gonzalez initiated coverage on Darden Restaurants on Sept. 16 with a Buy rating and a price target of $240.
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