How To Earn $500 A Month From PepsiCo Stock

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As PepsiCo, Inc. (NASDAQ:PEP) navigates its financial challenges, could its dividends hold the key to consistent monthly income for savvy investors? With recent market shifts and the looming presence of an activist investor, the allure of a steady cash flow is more enticing than ever.

PepsiCo shares closed slightly lower on Thursday. The company is struggling with deteriorating financial health, marked by rising debt and weak cash flow, and the recent arrival of activist investor Elliott Investment Management is unlikely to provide a near-term solution, according to a research note from GimmeCredit.

On Sept. 11, UBS analyst Peter Grom maintained PepsiCo with a Buy and lowered the price target from $175 to $170.

With the recent buzz around PepsiCo, some investors may be eyeing potential gains from the company's dividends too. As of now, PepsiCo offers an annual dividend yield of 4.04%, which is a semi-annual dividend amount of $1.42 per share ($5.68 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 $148,329 or around 1,054 shares. For a more modest $100 per month or $1,200 per year, you would need $29,694 or around 211 shares.

To calculate: Divide the desired annual income ($6,000 or $1,200) by the dividend ($5.69 in this case). So, $6,000 / $5.69 = 1,054 ($500 per month), and $1,200 / $5.69 = 211 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.

PEP Price Action: Shares of PepsiCo fell 0.4% to close at $140.73 on Thursday.