Sep
When the market feels uncertain, investors often turn to assets that can provide them with stable returns.
With tech stocks seeing wild volatility as we head into the summer, there’s a way to tap into their potential without taking on excessive risk. Enter, Invesco QQQ Trust Series 1 QQQ.
For the unaware, QQQ is an ETF that tracks the Nasdaq-100 Index, comprising the 100 largest non-financial stocks listed on the Nasdaq. With a heavy concentration on tech companies, QQQ allows investors to own a piece of the sector’s giants like Microsoft Corporation MSFT, Apple Inc AAPL, Alphabet Inc GOOG, and Amazon.com, Inc AMZN — all in a single trade.
QQQ is currently the fifth most popular ETF globally, with over $160 billion in assets under management. Its focus on fast-growing sectors, excluding financials, makes it an appealing option for investors looking for growth.
The ETF’s composition is heavily skewed toward mega-cap tech stocks. Here’s a look at QQQ’s top 10 holdings:
- Microsoft: 12.63%
- Apple: 12.60%
- Alphabet: 7.4%
- Amazon: 6.3%
- Nvidia Corporation NVDA: 5.3%
- Meta Platforms Inc META: 3.7%
- Tesla Inc TSLA: 3.4%
- Broadcom Inc AVGO: 2.0%
- PepsiCo, Inc PEP: 2.0%
- Costco Wholesale Corporation COST: 1.7%
How can investors earn $500 per month from the Q’s?
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 QQQ’s 0.59% dividend yield: $6,000 / 0.0059 = $1,016,949.15.
So, an investor would need to own $1,016,949.15, or 2,827 shares to yield $500 per month.
For a more modest amount, say an investor is aiming to earn $100 per month in dividends, amounting to $1,200 annually.
We divide the $1,200 by QQQ’s dividend yield: $1,200 / 0.0059 = $203,389.83.
This means that an investor would need approximately $203,390, or 565 shares to yield $100 per month in dividends.
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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