How To Earn $1,000 Per Month From Diageo Stock

Author: Shankar Iyer | January 17, 2024 01:44pm

At the end of trading on Dec.15, Diageo plc (NYSE:DEO) stock closed at $142.85. The 52-week price range for Diageo was $135.63 to $190.02.

On Aug. 3, the London-based alcoholic beverage company filed its annual report for the fiscal year ending June 30. Dividends declared for the final quarter and the fiscal year were 5% higher compared to the dividends for the final quarter of 2022 and the entire preceding fiscal year. An Oct. 9 press release disclosed that the interim dividend for the fiscal year ending in June 2024 is expected to be declared in January.

The company's annualized dividend is approximately $3.08 with a forward-looking yield of 2.7%.

Read Next: 

• Jeff Bezos called the meteoric success of this real estate investing strategy early on. He bet millions on the growth of fractional investing, and you can get in on the action with as little as $100.
• While offices have been getting emptier, this underrated commercial real estate sector saw a 288% spike in occupancy and you can invest in it.

How Can You Earn $1,000 Per Month As A Diageo Investor?

If you want to generate an income of $1,000 per month — $12,000 annually — from Diageo's dividends, your estimated investment value would be approximately $444,444, which is around 3,111 shares at $142.85 each. If your earnings target is $200 per month, your estimated investment falls to $88,889 for 622 shares.

Using dividend yields to calculate an estimated investment value: You can calculate your estimated investment value using two variables: the desired annual earnings target of $12,000 or $2,400 and the dividend yield of the stock, which is 2.7% in this case. So, $12,000 / 0.027 = $444,444 to earn an income of $1,000 per month, and $2,400 / 0.027 = $88,889 for $200 per month. 

Movements in the stock's price and changes in the company's dividend policy affect the dividend yield. If the stock price remains fixed, there is a positive correlation between the yield and the payout. That is, dividend yield will increase when the company increases the payout and vice versa. 

Assume a stock that pays $2 as an annual dividend is priced at $50. Its dividend yield would be $2 / $50 = 4%. If the stock price rises to $60, the dividend yield drops to 3.33% ($2 / $60). A drop in stock price to $40 will have an inverse effect and increase the dividend yield to 5% ($2 / $40).

Disclaimer: Since Diageo was first listed on the London Stock Exchange with the symbol DGE in 1997, the company continued filing its annual report in sterling. On Sept. 28, the company adopted new Articles of Association to change its currency from Sterling to U.S. dollars. All future dividends will be declared in U.S. dollars. Its currency for financial reporting, starting July 1, 2023, will be in U.S. dollars.

The above estimations and calculations are according to the stock price on Dec. 15 using an annualized dividend. The price of Diageo stock at the end of trading hours on Dec. 22 was $145.28.

Posted In: DEO