Jefferies Financial Group on Tuesday maintained ZIM Integrated Shipping Services Ltd (NYSE:ZIM) with a Hold rating, but lowered its price target from $16 to $13.
And while shares are trading around the $12.30 level right now, the new price target still implies a 5.69% upside.
But, the 5.69% equity appreciation isn't what we're here for.
We're here for ZIM's staggering 137.14% dividend yield.
So, how much ZIM would an investor need to own to yield $500 per month in dividends?
We'll start with our monthly target of $500, which translates to an annual target of $6,000 ($500 x 12 months).
Next, we'll divide the $6,000 by ZIM's 137.14% dividend yield: $6,000 / 1.3714 = $4,374.52.
So, an investor would need to own about $4,374.52 worth of ZIM, or 354 shares to yield $500 per month.
For a more modest amount, say $100 per month in dividends, an investor would need just $875, or 71 shares of the maritime shipping giant.
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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 price is $50, its dividend yield would be 4%. 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.
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