Nike Inc. (NYSE:NKE) will release first-quarter earnings after the closing bell on Thursday, Oct. 1.
With the recent buzz around the apparel company, some investors may be eyeing potential gains from its dividends. Currently, Nike has an annual dividend yield of 4.63%, with a quarterly dividend of 41 cents per share ($1.64 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 $129,529, or around 3,659 shares. For a more modest $100 per month or $1,200 per year, you would need $25,913 or around 732 shares.
To calculate: Divide the desired annual income ($6,000 or $1,200) by the dividend ($1.64 in this case). So, $6,000 / $1.64 = 3,659 ($500 per month), and $1,200 / $1.64 = 732 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 trades at $50, the dividend yield is 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 also decrease.
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Nike Price Action
Nike shares fell 1.2% to close at $35.40 on Wednesday.
Analysts expect the company to report quarterly earnings of 44 cents per share, down from 49 cents per share a year ago. The consensus estimate for Nike’s quarterly revenue is $11.33 billion. It reported $11.72 billion last year, according to Benzinga Pro.
The company has beaten analyst revenue estimates for seven straight quarters and in eight of the past 10 quarters overall.
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