Here's How Many Shares of Sirius XM Stock You'd Need for $10,000 In Yearly Dividends

Key Points

• Sirius XM pays a sizable dividend yield of almost 5%.

• The company generates robust free cash flow each quarter.

• Industry headwinds continue to pressure subscriber and revenue numbers.

• 10 stocks we like better than Sirius XM ›

Despite facing industry headwinds, Sirius XM (NASDAQ: SIRI) is still a well-known company that many people might be familiar with. It's probably on investors' radars, mainly due to the fact that Warren Buffett-led Berkshire Hathaway owns 37% of Sirius XM's outstanding shares.

The company's stock price has tanked 56% in the past five years (as of Sept. 25). But income-seeking investors might still be interested in owning a piece of this radio business. Here's how many shares of Sirius XM stock you'd need to generate $10,000 in yearly dividends.

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Passive income stream

Sirius XM currently pays a quarterly dividend of $0.27 per share. On an annualized basis, this comes out to $1.08 per share. Investors who want to make $10,000 in passive income from the company need to own about 9,259 shares. Based on the current stock price, this would require an investment of more than $207,000.

The company's dividend yield sits at a hefty 4.83%. That's almost four times greater than the average of the S&P 500.

Bearish view

There doesn't appear to be a near-term threat to the dividend. Sirius XM is consistently profitable, producing $402 million in free cash flow during the three-month period that ended June 30.

However, the business continues to register declining subscriber and revenue bases. There is heightened competition from internet-based streaming platforms that give people plenty of options for listening to audio content.

Despite shares trading at a cheap valuation, investors might want to think twice before adding Sirius XM to their portfolios.

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Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.