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Here's How Many Shares of PepsiCo You'd Need for $20,000 in Yearly Dividends
Key Points
Pepsi has increased its dividend payout for 54 consecutive years.
It's currently paying a quarterly dividend of $1.48 per share.
To generate $20,000 a year in dividend payouts from Pepsi, the risk isn't worth the reward.
PepsiCo (NASDAQ: PEP) is known for its reliability, having increased its dividend payout for 54 consecutive years.
But in addition to earning the title of Dividend King by increasing that payout for 50 or more consecutive years, that dividend payout also comes with a generous yield: 4.2% as of this writing.
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To turn Pepsi into an income generator for retirement or just to have some extra money coming in, this is the number of shares needed to generate $20,000 a year in PepsiCo dividends.
Image source: Getty Images.
The magic number
Pepsi pays a quarterly dividend of $1.48 per share, so you would need roughly 3,378 shares to generate $20,000 in yearly dividends. Based on the Aug. 6 closing price of $138.44, those shares would cost $467,650.
No matter the budget an investor is working with, however, there's a reason relying heavily on Pepsi is a risky move.
Lack of diversification
If an investor makes Pepsi one of their largest holdings, it creates a lot of risk, as the majority of the portfolio would be reliant on just one company.
Pepsi is a relatively stable stock, but any stock price losses could cut into total returns. Instead, investors with any size budget would be better off considering Pepsi as part of a portfolio for income generation rather than relying on it entirely.
Jack Delaney 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.