Consider this: FedEx (NYSE:FDX) is a gauge of the U.S. transportation market, and even of America’s economic health. That’s a deep thought, but it’s not an exaggeration. FedEx is laying off thousands of workers, which is crucial news. This is good news for FedEx stock investors.
Income-focused investors should definitely put some FedEx shares in their portfolios. Do you believe in the magic of dividend reinvestment and the “get rich slowly” principle? If so, then you won’t want to miss this opportunity.
Don’t Be Alarmed by FedEx Job Cuts
Generating revenue doesn’t mean much if a company is spending too much money. Therefore, it’s a smart idea for FedEx to implement measures to reduce the company’s expenditures.
FedEx plans to reduce its workforce in Europe by 1,700 to 2,000 jobs during the next 18 months. To provide some context, FedEx employs around 50,000 workers in Europe.
FedEx expects these layoffs will help the company save the equivalent of $125 million to $175 million per year, starting from 2026 to 2027. Importantly, FedEx “stressed the cuts will not affect customers or its delivery service,” according to a PA Media report.
It’s entirely possible that FedEx will enact more cost-cutting measures in the coming quarters, but don’t be alarmed. Plenty of businesses have laid off workers during the past couple of years, as it’s just part of the right-sizing process during these challenging economic times.
How You Can Earn $500 a Month From FedEx Stock
Here’s a great piece of news for income-focused investors. FedEx recently approved a 10% increase of the company’s annual dividend payout, from $5.04 to $5.52 per share for fiscal 2025.
Certainly, that’s a sign of the company’s confidence in its ability to generate revenue and income. From a bigger-picture perspective, it might even be a positive sign for the U.S. economy.
So, how much money would you need to invest in FedEx stock in order to generate dividend income of $500 per month? This means you would need to generate $6,000 per year. Hence, we would take $6,000 and divide it by the forward annual dividend ($5.52 in this case).
Next, $6,000 divided by $5.52 equals 1,087 FedEx shares. That’s what you would need to generate $500 per month in dividend distributions. In dollar terms, assuming the stock trades at around $253 per share, you would need $253 times 1,087 shares, or $275,011.
FedEx Stock: Use the Magic of Dividend Reinvestment
It’s fine if you don’t happen to have $275,011 available in your portfolio. You can still buy and hold FedEx shares and collect FedEx’s generous dividend distributions. Then, you can reinvest those dividends into more FedEx shares to potentially compound your returns.
In the meantime, FedEx is making the forward-thinking move of reducing its workforce in order to cut costs. This could help the company firm up its finances and continue to pay generous dividends.
Thus, income investors should take advantage of this prime opportunity and buy some FedEx stock today.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
