How to make $500 of monthly income from CBA shares

Commonwealth Bank of Australia (ASX: CBA) shares are a popular option for income investors and it isn’t hard to see why.

Over the last three decades, Australia’s largest bank has paid billions and billions of dollars in dividends to its shareholders.

The good news is that this is unlikely to change any time soon, with analysts forecasting bigger and bigger dividends over the coming years.

With that in mind, let’s take a look to see what it would take to generate a $500 monthly income from CBA’s shares.

How to make $500 monthly income from CBA shares

As a reminder, in FY 2022, the banking giant paid its shareholders a fully franked $3.85 per share dividend.

According to a note out of Goldman Sachs, its analysts expect this to increase to $4.68 per share in FY 2023. After which, the broker expects further increases to $4.84 per share in FY 2024 and then $4.91 per share in FY 2025.

If you wanted to generate $500 of monthly income from CBA shares, you would need to receive $6,000 of dividends each year and then distribute them accordingly.

In order to receive $6,000 of dividends in FY 2023, you would need to own 1,282 shares based on Goldman’s dividend estimate.

That’s no small purchase, unfortunately. With the CBA share price currently fetching $96.95, this would mean an investment of almost $125,000.

But it sure could be worth it if you have those funds at your disposal. Based on Goldman’s estimates, your investment would then generate $6,200 worth of dividends in FY 2024 and then almost $6,300 the following year.

That’s a total of $18,500 of dividends in the space of three years.

And if its shares were to bounce back from current levels to hit its recent high of $111.43, your $125,000 investment would grow to be worth approximately $143,000.

The post How to make $500 of monthly income from CBA shares appeared first on The Motley Fool Australia.

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