Month: September 2016

Free cell phone bill for life

How much cash would pay your phone bill for a life time?

LessonRetirement

As a 22 year old who lives at home, I don’t have as many bills as a retiree would need to cover. However, in today’s world, practically anyone into investing and / or money would have a cell phone bill to take care of.

Cell phones have become a staple of modern day life, and this monthly cost can vary greatly from person-to-person, depending on the phone they’ve picked up (on contract) to the data plan they commit to.

Considering I’m fairly frugal, and live in Canada, the plan I’m stuck with is $39 a month for 600 mb. The Canadian telco’s retain their oligopoly by devouring any smaller telcos which appear on the scene. For example, Wind Mobile was fought over but ultimately sold to Shaw Communications and Manitoba Telecom was purchased by Bell, with the customers being split between Bell and Telus so that they could garner regulatory approval. Considering the average Canadian does not have any choice but to pick one of the Big 3 across the majority of Canada, consumers have been completed gouged.

While it’s no fun being a victim of price gouging, you can ease the pain by participating in the stock market and purchasing some of these companies. The dividends received from owning these stocks can go towards your cell phone bill. Essentially, the money they’re gouging from you and your fellow Canadians, can be put back into your pocket to pay for that exact bill.

In other words, the cash you would receive in dividends from the Canadian telecommunications giants would nullify your cell phone bill. All you have to do is save up enough of a chunk of money to invest enough in order to receive adequate cash flow to cover the bill.

Covering a $40 Phone Bill

With tax included, my phone bill comes out to $45.37 per month, which is $544.44 a year.

Telus, my favourite telecoms investment pays a dividend of $1.84 per year. To cover that $544.44 per year phone bill, I would require 296 shares of Telus. At $42.92 a pop, it would cost me $12,704.32… That’s a lot of money, sure; but the investment value should grow as time goes on too. Therefore, you keep the cash and are rewarded with a paid off monthly phone bill.

If I was to attempt to cover this bill with a different telecom investment, such as Bell, it would cost a total of $12,186.63 to purchase 201 shares which would yield $546.72. Finally, if I were investing in Rogers, it would cost a total of $15,815.96 (much more!) to purchase 284 shares to yield $545.28. The reason it costs so much more to cover your bill by investing in Rogers is due to it’s relatively low dividend yield of 3.45%, while Telus and Bell yield closer to 4.50% (see below).

Company Price Shares Cost Yield Dividend Return
Telus $42.92 296 $12,704.32 4.29% $1.84 $544.64
Bell $60.63 201 $12,186.63 4.50% $2.72 $546.72
Rogers $55.69 284 $15,815.96 3.45% $1.92 $545.28

Now that’s a lot of cash to save up – but the reward – covering your phone bill for the rest of your life, is obviously well worth it. Like all other bills, investing for dividends is one great way to become financially independent – it’s simply a plus if you can achieve such a thing by investing in the same sector as your bill came from, and it seems cool.

While it would personally cost me that much to be able to cover my cell phone bill outright, the number obviously varies depending on the bill. I know people who pay $100 for their phone every month, and I find that absolutely insane – but to each their own.

Covering a $100 Phone Bill

For the sake of completeness, let’s look at how much it would cost to cover a $100 phone bill by receiving dividends from an investment for each of the Big 3 Telecoms.

Company Price Shares Cost Yield Dividend Return
Telus $42.92 653 $28,026.76 4.29% $1.84 $1,201.52
Bell $60.63 442 $26,798.46 4.50% $2.72 $1,202.24
Rogers $55.69 625 $34,806.25 3.45% $1.92 $1,200.00

I definitely don’t want to have to save up $28,000 instead of the $13,000 I’m currently concerned with. This is a great demonstration of how having your bills under control makes it a ton easier to achieve financial independence.

Well, there you have it – you now have the knowledge to calculate for your self exactly how much cash you need to bank to cover your phone bill. The thing about investing to pay off your bills is – all your bills can function exactly like this. We just demonstrated a baseline cost for covering $100 in monthly bills. If your entire portfolio was to pay out the same yields as these telecoms then it’s some very simple math for you to find out right now what you’d need to achieve financial independence.

August 2016 Dividend Income

Dividends

After a no-buy in July, I’ve come back in August with an increased position in Exchange Income Corp. (TSX: EIF). I believe this company has a bright future ahead of it and is in a very niche position with very little competition and are diversified and unique. They continue to build their empire and I look forward to future acquisitions in the company.

The market overall remains unimpressive for buying stocks but after not buying anything in July I feel as though I had to make a purchase. After all, we’ve heard time in the market vs timing the market countless times – and I feel the need to continue boosting my dividend income as growth has slowed down big time in the past quarter of the year for myself, after regularly increasing my annual dividend income by $200+ monthly for the first part of the year.

It’s hard buying stocks in Canada. I’d really like for the USD to be lower as I can diversify into the U.S. market as it’s difficult to diversify away from financials and energy in this small market. The consumer staples stocks yield so little while costing so much, it’s difficult to justify purchasing them at this point – though, Metro (MRU) continues to call to me.

Summary of August Investment Activities

Throughout August, I’ve purchased:

Two of my holdings increased their dividends.

None of my holdings reduced their dividends. Great news!

Annual Dividend Income Update

May 2016 Net Increase June 2016
Annual Dividend Income $2,118.86 $90.48 $2,209.34
Monthly Dividend Income $176.57 $7.54 $184.11
Percentage Increase +4.27%
YTD Increase +106.91%

August 2016 Dividend Income

Non-Registered Taxable Account
NA $16.50
ZWU $7.02
WCP $2.80
IPL $5.59
EIF $12.56
ENF $7.78
AD $16.20
RY $20.25
Tax-Free Savings Account
AAR.UN $3.90
PLZ.UN $5.63
IPL $7.41
D.UN $5.63
DRG.UN $6.67
AD $6.75
RNW $11.00
HR.UN $4.95
CJR.B $9.98
Total
$154.52

Dividend Income Journey

August Monthly Dividend Income

August was a decent, slow and steady month. $154.52 was added to the Dividend Beginner’s coffers for reinvestment.

YoY Monthly Dividend Income

The trend of dividend income falling down in August continued this year as we rake in $155 vs $225 from last month. In August 2015, I received $41.98. This year income increased by $112.54, or 268.08%.

total 2016 dividend income

Sure enough as we predicted last month, this August marks the first time the portfolio has generated $1,000 within one year’s time. After 8 months, the portfolio has generated $1,129.65

$1,129.65 works out to 65% of our $1,750 goal.
lifetime dividend income

I’d like to keep track of my lifetime dividends as it will always be the largest number I can attribute to dividend income, and ultimately is all the passive income I’ve generated from the beginning of this portfolio to now. It’s a great chart to display exactly what you could accomplish when you save your earnings and invest in dividend growing stocks.

After 17 months of receiving dividends and 18 months of investing, I’ve generated over $1,600 in passive income. After August 2016, my record is now $1,673.09 in dividend income that I earned from having the foresight to invest my money in income generating assets. The great thing about this is that even if I stop investing now, that money will continue to flow into my bank account every month without me lifting a finger, and what’s more is that it will even grow as time goes on considering I took the time to invest in dividend growing companies with proven track records.

How was all of my fellow investors’ August 2016? Any new positions? Dividend Raises? Dividend Cuts? Looking forward to September? 

Bank of Nova Scotia

Scotiabank (BNS) raises dividend by 2.8%

Dividend Raises

Scotiabank reported third quarter net income of $1,959 million compared to $1,847 million in the same period last year. Diluted earnings per share were $1.54, compared to $1.45 in the same period a year ago. (scotiabank.com)

In addition to reporting a 6.06% increase in net income Y/Y, BNS announced a quarterly dividend raise from $0.72 to $0.74, a 2.78% increase.

Dividend Income increased 0.18%

Considering the Dividend Beginner portfolio contains 50 shares of BNS, my annual income from BNS has increased by $4.00. My 12-month forward dividend income has increased from $2,205.34 to $2,209.34, an increase of 0.18%. My income from BNS accounts for 6.70% of my annual dividend income. I’m very comfortable with my exposure to BNS and would not be opposed to adding to my position, despite it being my largest bank investment.

While a $4.00 increase in annual dividend income seems quite low, think about how it would require an investment of $100.00, yielding 4.00% to generate $4.00 in dividend income. That’s the equivalent of getting one to ten hours of your life back, depending on your wage.

Before Net Increase After
Annual Dividend Income $2,205.34 $4.00 $2,209.34
Monthly Dividend Income $183.78 $0.33 $184.11
Percentage Increase 0.18%
Royal bank of canada

Royal Bank of Canada hikes their dividend 2.5%

Dividend Raises

On August 24th, the

Royal Bank of Canada (RY on TSX and NYSE) today reported record net income of $2,895 million for the third quarter ended July 31, 2016, up $420 million or 17% from a year ago and up $322 million or 13% from last quarter. In addition, today we announced an increase to our quarterly dividend of $0.02 or 2% to $0.83 per share. (rbc.com)

However the net income above includes a $235 million after-tax gain on the sale of their home and auto insurance business (RBC General Insurance Company).

Royal Bank of Canada net income up 17% from a year ago

If we strip the gain from the sale away from their net income for a more organic perspective, RBC generated net income of $2,660 million, up $185 million or 7% from one year ago. That’s still a great number though, in consideration of all the fear around Canadian banking linked to the oil patch. It seems like the worst is behind us and the banks may be picking up – but we have yet to see oil come up in a significant way and the Canadian housing market is in bubble territory.

Dividend Income increased 0.09%

As stated, RBC has increased their quarterly dividend from $0.81 to $0.83, a 2.5% increase.

Considering the Dividend Beginner portfolio contains 25 shares of RY, my annual income from RY has increased by $2.00. My 12-month forward dividend income has increased from $2,203.34 to $2,205.34, an increase of 0.09%. My income from RY accounts for a very safe 3.76% of my annual dividend income.

While a $2.00 increase in annual dividend income seems quite low, think about how it would require an investment of $50.00, yielding 4.00% to generate $2.00 in dividend income. That’s the equivalent of getting one to five hours of your life back, depending on your wage.

Before Net Increase After
Annual Dividend Income $2,203.34 $2.00 $2,205.34
Monthly Dividend Income $183.61 $0.17 $183.78
Percentage Increase 0.09%

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My publishings on dividendbeginner.com references an opinion and is for information or entertainment purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice. I am not responsible for any decisions you make concerning finances, taxes, or investments. You must perform your own research and always take caution when extending capital.