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Investors need a lot of shares (and capital) to generate $25,000 in yearly dividends from PepsiCo stock.
The good news is that this is one of the most dependable dividend growth stocks.
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In investing, goal-setting is important. Whether it’s retirement planning, using stocks to save for a home, or just simple wealth-building, investors should identify their end games early on in the process.
Many dividend investors are already checking that box. Before getting involved with a stock, many experienced payout hunters will say to themselves, “I want to generate $X per year in dividends from a particular stock.”
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Investors will need a lot of cash to get to $25,000 in yearly dividends with PepsiCo stock. Image source: Getty Images.
Obviously, there’s some math behind that exercise, but fortunately not the high school algebra kind. For investors who want to harness $25,000 a year, an impressive sum to be sure, from PepsiCo (NASDAQ: PEP), knowing the math is essential. With a 4% increase delivered in February, PepsiCo stock features a yearly payout of $5.92 per share. Divide $25,000 by the dividend of $5.92, and the result is that 4,223 shares are required to generate $25,000 in annual dividends from Pepsi.
Here’s where the dividend math gets intimidating with this consumer staples stock. PepsiCo closed at $140.52 on Sept. 2. Round down and call it $140.50, multiply that by 4,223 shares, and the result is $593,331.50.
Generating $25,000 a year in dividends from PepsiCo is definitely an ambitious goal. But that doesn’t mean market participants should forget the value of ambition in investing. Nor does the math imply that they should simply gloss over PepsiCo.
Over time, the math becomes more favorable, particularly if an investor makes regular additions to their PepsiCo stake. Time is also on the side of patient shareholders with this stock because it’s raised its payout for 55 consecutive years, making it a Dividend King, or a company with an annual dividend increase streak of at least 50 years.
That’s where the math becomes more favorable because, as PepsiCo’s dividend rises, less capital is required for investors to reach their $25,000 dreams.
Should you buy stock in PepsiCo right now?
Before you buy stock in PepsiCo, consider this:
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Todd Shriber has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.