Looking to start investing in dividends but don’t know where to start? If you want to develop a passive income stream to complement your wage, picking the proper stocks and investing the right amount are crucial.
Following this article will show you how to invest in NextEra Energy, a utility company, and start receiving $500 in dividends every month.
NextEra Energy: A Dividend Stock Gem
By market value, NextEra Energy (NYSE: NEE) is the biggest utility holding company in the world. It operates in 30 states across the US and Canada. Roughly 5.6 million customers get their electricity from NextEra’s subsidiaries, such as utility Florida Power & Light.
Investors in dividends may find NextEra’s history of regular distributions and dividend increases particularly attractive:
- 3.25 percent dividend yield is higher than the average for the utilities sector
- 15 years of steadily increasing dividends
- Dividend growth rate for the past ten years: 9.4 percent annually
Shares of NextEra are a strong choice for passive income due to their dependable distributions and a history of gradual but steady dividend increases, which help fight inflation.
Calculate Your Target Investment for $500 Monthly in Dividends
What amount would you need to invest in NextEra to receive $500 in dividends every month at an annual yield of 3.25%? Just follow these three simple steps:
Step 1) Determine Your Target Annual Dividend Income
If your goal is $500 monthly, that equates to $6,000 annually ($500 x 12 months). This is the total dividend income you want to earn per year.
Step 2) Divide By NextEra’s Dividend Yield
Take your desired annual dividend income and divide it by NextEra’s current dividend yield.
Therefore, $184,615 is the result of dividing $6,000 by 3,25 percent.
Here you can get the total investment required to generate $6,000 in dividend income per year at a yield of 3.25%.
Step 3) Convert To Number of Shares
You may calculate the number of shares you need to purchase by dividing the entire investment amount by the current share price of NextEra.
With NEE trading around $59.30, $184,615 / $59.30 per share = 3,113 shares
You may earn an additional $500 per month or $6,000 per year in passive dividend income from 3,113 shares of NextEra Energy, which is currently trading at $59.30 and yields 3.25% annually. You can use this money to supplement your salary, save for retirement, or pursue other financial objectives.
What If You Want Less Income? Adjust Inputs Accordingly
Assuming your monthly goal is less than $500, the procedure remains unchanged. Suppose you want to make $100 monthly or $1,200 a year:
- Step 1) $1,200 Target Annual Dividend Income
- Step 2) $1,200 / 3.25% Dividend Yield = $36,923 Total Investment
- Step 3) $36,923 / $59.30 per Share = 623 Shares
A monthly dividend income of approximately $100 would result from purchasing 623 shares. Personal income goals should inform the adjustments made to the inputs.
Remember: Yields And Share Prices Change Over Time
Yields and share prices are two variables that might change over time, which can make it difficult to predict future dividend payments.
The yield on NextEra stock will decrease regardless of the dividend rate if the share price goes up. The dividend could go up, stay the same, or go down depending on the company’s decision.
To keep up with these changes, you should review your income goals and necessary investments on a regular basis and make adjustments as needed. You can also help your earnings multiply over time by reinvesting dividends as you go along.
A solid way to develop the passive income stream you desire is to continuously execute this dividend stock strategy across a broad portfolio of firms like NextEra.