How To Earn $500 A Month From Caterpillar Stock Ahead Of Q2 Earnings

Caterpillar Inc. (NYSE:CAT) is expected to release earnings results for its second quarter, before the opening bell on Tuesday, Aug. 6.

Analysts expect the Irving, Texas-based company to report quarterly earnings at $5.54 per share, down slightly from $5.55 per share in the year-ago period. Analysts expect Caterpillar to post revenue of $16.68 billion, compared to $17.32 billion a year earlier.

On June 28, Raymond James analyst Tim Thein initiated coverage on Caterpillar with a Market Perform rating.

With the recent buzz around Caterpillar, some investors may be eyeing potential gains from the company's dividends. As of now, Caterpillar has a dividend yield of 0.45%, which is a quarterly dividend amount of 25 cents a share ($1.00 a year).

To figure out how to earn $500 monthly from Caterpillar, we start with the yearly target of $6,000 ($500 x 12 months).

Next, we take this amount and divide it by Caterpillar's $5.64 dividend: $6,000 / $5.64  = 1,064 shares

So, an investor would need to own approximately $341,406 worth of Caterpillar, or 1,064 shares to generate a monthly dividend income of $500.

Assuming a more conservative goal of $100 monthly ($1,200 annually), we do the same calculation: $1,200 / $5.64 = 213 shares, or $68,345 to generate a monthly dividend income of $100.

Note that dividend yield can change on a rolling basis, as the dividend payment and the stock price both fluctuate over time.

The dividend yield is calculated by dividing the annual dividend payment by the current stock price. As the stock price changes, the dividend yield will also change.

For example, if a stock pays an annual dividend of $2 and its current price is $50, its dividend yield would be 4%. However, if the stock price increases to $60, the dividend yield would decrease to 3.33% ($2/$60).

Conversely, if the stock price decreases to $40, the dividend yield would increase to 5% ($2/$40).

Further, the dividend payment itself can also change over time, which can also impact the dividend yield. If a company increases its dividend payment, the dividend yield will increase even if the stock price remains the same. Similarly, if a company decreases its dividend payment, the dividend yield will decrease.

CAT Price Action: Shares of Caterpillar fell 3.2% to close at $320.87 on Friday.

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