Apple Inc. (AAPL) shares hit an all-time high on Tuesday, closing at $276.97. Not bad for a company that's also shaking things up with plans to launch three new iPhone models over the next three years and tweaking its release schedule in what the company is calling a major transformation.
But here's what income-focused investors really want to know: can Apple's dividend actually put money in your pocket each month? Let's run the numbers.
Right now, Apple pays an annual dividend yield of 0.38%. That translates to 26 cents per share every quarter, or $1.04 per year. It's not exactly a high-yield dividend play, but when you're dealing with a company trading near $277 per share, those pennies add up if you own enough shares.
So how do you get to $500 a month in dividend income? Start with the annual target: $500 times 12 months equals $6,000 per year. Now divide that by Apple's annual dividend of $1.04 per share. The math gives you 5,769 shares.
In other words, you'd need to own approximately $1,597,840 worth of Apple stock—or 5,769 shares—to generate $500 in monthly dividend income.
If that sounds a bit steep, let's try a more achievable target. For $100 monthly (or $1,200 annually), you'd need 1,154 shares, which comes out to about $319,623 worth of Apple stock.
Keep in mind that dividend yields aren't set in stone. They fluctuate as both the stock price and dividend payments change over time. The yield is calculated by dividing the annual dividend by the current stock price, so it's a moving target.
Here's how that works in practice: if a stock pays a $2 annual dividend and trades at $50, the yield is 4%. But if the price climbs to $60, that same $2 dividend now yields just 3.33%. Conversely, if the stock drops to $40, the yield jumps to 5%.
The dividend payment itself can also change. Companies that increase their dividends boost the yield even if the stock price stays flat. Cut the dividend, and the yield falls accordingly.
AAPL Price Action: Shares of Apple gained 0.4% to close at $276.97 on Tuesday.
