With the recent buzz around U.S. Steel Corporation, some investors may be eyeing potential gains from the company’s dividends.
U.S. Steel currently offers an annual dividend yield of 0.43% — a quarterly dividend amount of 5 cents per share (20 cents a year).
For the manufacturer’s fourth quarter earnings results, set to be released after the closing bell on Feb. 1, analysts expect quarterly earnings at 26 cents per share. That’s down from 87 cents per share in the year-ago period.
The Pittsburgh-based company is projected to post revenue of $3.76 billion, compared to $4.34 billion in the year-earlier quarter, according to data from Benzinga Pro. About 79% of revenue comes from the U.S. whereas 21% comes from Europe.
Nippon Steel is also expected to be mentioned in the report. Japan’s largest steelmaker recently announced plans to acquire the 123-year-old U.S. Steel for $55 per share in an all-cash transaction.
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 $1,410,600 or around 30,000 shares. For a more modest $100 per month or $1,200 per year, you would need $282,120 or around 6,000 shares.
To calculate: Divide the desired annual income ($6,000 or $1,200) by the dividend ($0.20 in this case). So, $6,000 / $0.20 = 30,000 ($500 per month), and $1,200 / $0.20 = 6,000 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.
X Price Action: Shares of U.S. Steel fell 2.4% to close at $47.02 on Wednesday.