So you're looking to collect $1,000 in dividend income from Walmart (NYSE: WMT). That's great -- dividend income is especially sweet because you don't have to do much to get it -- just own the dividend-paying stock. It's passive income -- arriving regularly in your investment account whether you're noticing it or not.
Let's look at how much you'd have to invest in Walmart stock in order to collect $1,000 in a year. The calculations we'll go through can help you figure out how much you'd need to invest in other stocks, too.
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All about dividends
First, a dividend primer. Dividends are generally dollars paid to shareholders by a company from earnings that are not needed for other purposes. (So fast-growing companies that need to reinvest every dollar in growth typically won't pay dividends, but once they're generating more money than they have good uses for, they may initiate a payout.)
Walmart is currently paying out $0.2075 per share per quarter, or $0.83 on an annual basis. (Its recent dividend yield, the annual dividend amount divided by its current stock price, is 1.24% -- $0.83 divided by the recent share price of $66.73.)
Getting $1,000 from Walmart's dividend
On to that dividend income. Take your desired dividend income, $1,000, and divide it by the dividend per share offered by Walmart. So that's $1,000 divided by $0.83, which is 1,205. That's the number of shares you'd need to own to generate $1,000 in a year. And here's what it would cost you to buy those shares: 1,205 times $66.73: $80,410.
That may be too much for you, so you might want to look for bigger dividend payers that can net you $1,000 with a smaller investment. It's also smart to never buy any stock just for the dividend. Make sure it's a good investment without the dividend. Walmart, for example, doesn't look like a screaming bargain at recent price levels, but it also seems to have a promising future.
Should you invest $1,000 in Walmart right now?
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Selena Maranjian has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Walmart. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
