Constellation Brands, Inc. (NYSE: STZ) is expected to announce its third-quarter earnings of $3.32 per share before the market opens on Thursday, January 9th. This projection represents an increase from the $3.19 per share reported in the same period last year. The company anticipates quarterly revenue of $2.54 billion, slightly higher than the $2.47 billion reported a year earlier, according to Benzinga Pro. This article explores how investors might leverage Constellation Brands’ dividend yield to generate a significant monthly income.
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Recently, Constellation Brands finalized an agreement with Sazerac, a global spirits company, to divest its Svedka vodka brand. Beyond potential stock price appreciation, Constellation Brands also offers investors a dividend opportunity. Currently, the company boasts an annual dividend yield of 1.82%, translating to a quarterly dividend of $1.01 per share, or $4.04 annually.
Calculating Your Investment for Monthly Dividend Income
How much would you need to invest in Constellation Brands to earn $500 per month solely from dividends?
To achieve a monthly income of $500, or $6,000 annually, from Constellation Brands’ dividends, an investment of approximately $329,551 would be required. This equates to owning around 1,485 shares. For a more manageable goal of $100 per month, or $1,200 per year, an investment of $65,910, or roughly 297 shares, would be necessary.
Calculation: Divide your desired annual income ($6,000 or $1,200) by the annual dividend per share ($4.04).
- $6,000 / $4.04 = 1,485 shares (approximately) for $500/month
- $1,200 / $4.04 = 297 shares (approximately) for $100/month
Understanding Dividend Yield Fluctuations
It’s crucial to remember that dividend yield is not static. It changes as both the dividend payment and the stock price fluctuate.
Dividend Yield Formula: Annual Dividend Payment / Stock Price
For instance, a stock with a $2 annual dividend and a $50 share price has a 4% yield. If the stock price rises to $60, the yield decreases to 3.33%, even if the dividend remains constant. Conversely, if the stock price falls to $40, the yield increases to 5%. Similarly, changes to the dividend payment itself will directly impact the yield. An increased dividend will raise the yield (assuming a stable stock price), and a decreased dividend will lower it.
Constellation Brands Stock Performance
Constellation Brands (STZ) stock closed at $221.92 on Friday, representing a 0.3% decrease.
Conclusion: Dividend Investing with Constellation Brands
While Constellation Brands’ upcoming Q3 earnings are generating interest, its dividend yield presents a potential avenue for investors seeking passive income. By understanding the relationship between dividend payments, stock price, and dividend yield, investors can make informed decisions about allocating capital for long-term income generation. However, it’s essential to conduct thorough research and consider individual financial goals before investing. Remember that past performance is not indicative of future results.
