Here's How Many Shares of Sirius XM You'd Need to Generate $1,000 in Yearly Dividends
Key Points
Sirius XM currently yields 3.85%, ahead of most money market fund alternatives.
After a few years of hikes, its dividend rate has held steady since late 2023.
Business has slowed for Sirius XM, but it's still a moneymaking machine.
- 10 stocks we like better than Sirius XM ›
It's easy to turn up the volume on a Sirius XM (NASDAQ: SIRI) satellite radio receiver. There's a knob or button for that. You can also turn up the volume on your dividend income with Sirius XM, but it takes a little more patience -- and math.
The country's lone provider of satellite radio serves a large audience, reaching 33 million subscribers to its premium audio platform. It also has a pretty large payout, currently yielding 3.85%. Let's dive into how many shares you would need to own to collect $1,000 in yearly dividends.
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Driving to a four-figure annual payout
With a quarterly dividend of $0.27 a share -- or $1.08 a year -- it would take 926 shares of Sirius XM for you to generate $1,000 in annual distributions. This would be a roughly $26,000 stake at current prices. You're also hoping for capital appreciation on top of that passive income when investing in stocks rather than pure income-generating investments, but that introduces downside risk.
Another benefit of stocks is that their payouts can rise over time. The media stock's quarterly rate has nearly tripled since it initiated a distribution policy of a split-adjusted $0.10 per share nearly a decade ago. This could make the math kinder -- with fewer shares needed to reach a round milestone like $1,000 in annual dividends -- but that's not an assumption investors can make today.
Sirius XM's quarterly dividend has remained steady at $0.27 for almost three years. With subscriber counts and revenue growth stalling during that time, Sirius XM has been more cautious than in its earlier history of hikes.
It's making more than enough money to cover its current distributions. Sirius XM is generating more than $1 billion in annual free cash flow. It's trading for just 12 times trailing earnings. The risks are there, but so is the upside if it can start growing its business again. For now, 926 shares is what you need to passively collect $1,000 a year in dividends from this unique media company.
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Rick Munarriz 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.
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