Buying Dividend Stocks to Pay Bills

Hey everyone!  Every month, we live in a world that we pay for our expenses on a typical monthly basis.  Most people budget monthly based on their food, shelter, car and other entertainment or daily needs.  You know what I personally love about my bills?  If something else is paying them for me!  One fun way and reason to invest into dividend paying stocks, is to almost view them as a way to build up an asset that pays these bills for you!  What do I mean?  Let’s check it out.

Bills to be paid in monthly periods

Paying the Bills

We all have our monthly expenses that are typical.  I wrote about some of my monthly bills a few months back, as a way to update where I stand on how much money goes out the door and how much of my dividend income makes up that.  A way to have fun with buying a dividend stock is to see how much of that stock you can buy in that particular expense category, where the dividend stream ends up paying your bill!  What are a few examples of what I am talking about?  I’ll break them down below:

  1. The Mortgage – We all love this one and there is a great big group of us that is currently paying them down.
  2. Internet & Cable – As much as it makes me cringe to say this – I know there are SO many people that have cable still, even though everyone knows I haven’t had cable in over 5 years!  However – I do have internet, with more recently me switching providers to have better service and a lower bill, a win win.
  3. Food – Do we need to eat?  Yep.  Haha.
  4. Transportation – Most of us have a vehicle that we use to get from Point A to Point B, sometimes to Point C, D & E, all in a day.  Oh and using gas to fill up at the tank : )
  5. Insurance – Home, Auto, Life, etc.. you name it – most of us have this type of expense on a monthly basis
  6. Phone Bill – similar to internet/cable – quite a few of us use a mobile phone and have that as a monthly expense
  7. Public Utilities – Water, Electric and Gas – here we go!

Why am I writing all of these?  Well, I am going to go down each one and I can use my life as an example, to talk about how much is being spent and what we can invest into to have our army of dividend paying stocks go to battle for us to pay those bills!  This also makes it a little more fun to invest.  Ready to dive in and start swinging down each one?  I am, let’s do it.

Dividend Paying Stocks to Pay the Bills

  1. The Mortgage – Okay, so you have a mortgage, mine without property tax and house insurance is roughly $447 per month.  My bank no longer exists, but we can use Wells Fargo (WFC) as an example.  Obviously $447 per month is quite a bit, as that is annualized out to $5,364, ouch.  This one is going to take a LOT of shares into Wells Fargo – One would need 3,529 shares!  Now, I am not going to go out and recommend dumping all of your assets into owning this many shares, BUT you can initiate a position and slowly build this over time.  One would need to invest over $170,000 into Wells Fargo to have this pay off your bill monthly, something that we may need help from Warren Buffet over haha.
  2. Internet & Cable – This one is a little more tolerable.  One could have Time Warner (TWC) or AT&T (T).   I used to have AT&T, but recently switched to a local provider.  My annual expense is $300 or $25 per month.  With AT&T’s dividend at $1.92 per year, you would have to own 156 shares of them, which just so happens I do.  Therefore, as of the recent close price, you you need approximately $6.4K invested into AT&T to pay your internet bill, not too bad to have someone pay the bill for you, every single month.
  3. Food – there are plenty of places to go grocery shopping – Whole Foods (WFM), Kroger (KR), Walmart (WMT) or even Target (TGT).  Now, I’m one person living in my house, so I spend about $60 per month or an annualized $720.  Now I love Target, so one would need 300 whopping shares!  I own 81, so not impossible, but one can get there in time.  One would need around $21K in today’s dollars to own that many shares.  Through DRIP and increases in dividends, it can be easier.
  4. Transportation – I sadly have an Auto Loan with Wells Fargo (WFC) and it kills me at $284 per month or $3,408 per year aka – we need a crap ton of shares here.  But maybe I can focus on gas?  Obviously you can always decrease the amount you drive, which I need to be better at.  I spend about $100 per month in gas or $1,200 per year.  I currently own two oil companies Shell (RDS) and TOTAL (TOT).  They currently produce $510 annually in dividends currently, so I’m 42.5% there.  With the downturn in oil & gas, and these two oil beasts haven’t really decreased their dividend – one would need almost an additional $9K invested, spread between the two.  The full position, then, would pay for gas usage on a monthly basis.  I’m almost there!!
  5. Insurance – ah, insurance.  With House and auto insurance, I pay $1,430 per year in insurance costs on these two.  I own Aflac (AFL), but there are other investments out there one can own.  Aflac pays $1.64 per year and one would need 872 shares currently.  I own about 106 shares and am just over 12% there.
  6. Phone Bill – Another fun one.  I recently left Big Red i.e. Verizon (VZ) and pay around $25-$30 per month.  Let’s say an average cell bill is $50 per month or $600 annualized.  One would need either 312 shares of AT&T to pay for your mobile phone provider or 265 shares of Verizion.  Can you do it?  I need to definitely add more to AT&T (T) when the time comes to start eating away at this monthly bill.
  7. Public Utilities – Here we go.  Electricity I have is provided by FirstEnergy (FE), gas provided by Dominion (D) and then Cleveland’s water.  Typically this all currently runs me at $75/month.  That is an annualized amount of $900 big ones.  Currently I own National Grid (NGG) and my Akron based FirstENergy (FE) and is providing me with $225/year.  I am still $675 off with the yield on average between the two companies at 4.77%, I would need to invest an additional $14K into them!  One could do it, but may take some time.  And as stated earlier – dividend reinvestment (DRIP) will help out along the way, as new shares from reinvestment will chip away at this total.

Div Stocks to pay the bills summary

All in all, the goal here is to demonstrate that there is a point to saving and investing, such as paying your bills!  You can make it a fun journey by focusing on each bill at a time and building that position with the right valuations.  A great example would be Target (TGT).  Target currently has a 2.7% weight in my overall portfolio and I wouldn’t mind, at it’s current price, adding more shares here.  Also, if AT&T (T) drops in price to the upper $30’s, then I’ll be more inclined to add more shares.  One can do this with all sorts of bills and mix in different companies as well.  What is interesting is that your bills may increase, even though we fight as much as possible to keep them low, but our dividend income typically grows through dividend increases and reinvestment!  This ultimately means our income keeps up, at least, with the increase of price (hopefully).

What do you guys think of this approach?  Ever have fun with your portfolio and think of it as a way to pay off your debts, bills and other expenses every month?  Obviously – need to make sure your portfolios aren’t weighted in certain directions and to keep it balances, but it definitely makes me smile knowing that expenses are taken care of by the same or similar stocks in that industry : )   Thanks everyone, hope you had a great weekend and talk soon!

-Lanny

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50 thoughts on “Buying Dividend Stocks to Pay Bills

  1. Yup thought a lot about but I don’t have many bills. It would also be nice to have that emergency room covered or unexpected trip to the doctors. If someone starts at 18 imagine what they could do by 60?

    • Doug,

      Yep, if you don’t have the bills, then you’re definitely in a better spot : ) For those that have them and want to keep the expenses, definitely a fun way to look at it. Emergencies to be covered are essentially clutch. If you invested heavily at 18, you’d be lightyears ahead, drives me nuts everyday!

      -Lanny

  2. This is exactly how I think about my dividends. Rather than the annual amount I like to think about what bill it is covering as it provides some motivation. Love how you broke the categories down into the particular stocks though, interesting concept!

    • Me too. I look at my monthly income and see what it can cover in any particular month. A simple and effective way to see what your dividend payments can go towards.

      • Hut,

        You got it. My most fun one currently is AT&T. But definitely look at it on an overall basis, as that is the true point – to see if the income > expenses. Ah… the journey and the quirks we try to make it more “fun”.

        -Lanny

    • Stefan,

      As always, thank you for coming by. Everytime someone has been complaining about a bill they have – I either would love for them to evaluate the bill to see if they for sure want/need to have it and then evaluate their expenses (as most complain about that, but then go to the mall and drop $250 on a few pieces of clothing, followed up with a nice dinner). So it’s all about prioritizing and finding that motivation to save and invest. That’s the nature of the game and hopefully this is one fun way to do just that.

      -Lanny

    • Tawcan,

      It’s an interesting take on it. Obviously we all have different expenses and think of different companies within those industries. It’s a good way to see where your money goes and hopefully that money that is released out flows right back into your pocket : ) Funny, right?

      -Lanny

  3. This is a really cool way to look at it! I’ve seen people look at what bills their side hustle could cover, but I like the idea of more passive income covering those.

    • Ms. Montana,

      Thank you for the comment, really appreciate it! All income is great, of course : ) But yes – those that are passive and recurring are even better. Think of it this way – I may have to go to “X” grocery store and typically will spend $200/per month. That “X” store has a built in margin to it all. What if you owned shares, so that not only are you feeding the top to bottom line, but also feeding your line too! I always think of it and thought – yep, I need to write about this, almost to alleviate all of the thoughts on my mind, but now I can always look back at the shear numbers to it.

      -Lanny

    • IH,

      Thanks for the comment. A different perspective, keeps things interesting and puts honest math to the test. Some are definitely achievable and well – others, a far-stretch achievable, but all in all, is a different view. I would love to build up the grocery store one, as you always need to eat to survive. Now.. what about the water companies? haha!

      -Lanny

    • D4s,

      Thank you! Yep – trying to spice things up anyway I can to keep a motivating factor going. Anytime I earn more shares of AT&T (T) through reinvestment, I think – yep, that covers any increase more than likely (though I’d fight any sort of internet price increase). Keeps it interesting and the mind going, that’s for sure.

      -Lanny

  4. Very interesting way to think about dividends. I’m a little jealous to see the relatively small bills you have. Living expenses here in the Bay Area is nuts. (Unfortunately, I can’t do the work I do anywhere else). But I can retire somewhere else and cut down a lot on my bills!

    • FerdiS,

      Yep – cost of living in the Bay Area is wayyyy different than Northeast Ohio. Except, we definitely have the better basketball team : ) But – of course, if you are doing what you love in an area that you love being – doesn’t make sense to deteriorate your happiness, unless you find something extremely comparable in a lower cost of living area. All about happiness at the end of the day.

      -Lanny

  5. I find it really hard to believe that you spend only $13.85/week on food…even in Cleveland…

    Granted, we live in the bay area in California, but I feel like we live pretty darn frugally, and my wife and I struggle immensely to keep our grocery budget below $60/week…

    According to this website (http://www.payscale.com/cost-of-living-calculator/California-Oakland/Ohio-Cleveland), the cost of groceries in Oakland CA (we live further out in the east bay, so I would think our cost is actually a bit less…but close enough) is about 16% higher than Cleveland. Sure that makes a difference, but not that big of a difference.

    $30/per person/21 meals per week is $1.43/meal…which, like I said, I think is pretty darn frugal.
    $16.07/per person (your budget adjusted +16% for CA prices)/21 meals per week is $0.77/meal…which, like I said, I just can’t fathom.

    Hopefully it’s healthy food, otherwise you might want to bump up your anticipated medical bills 😛

    Seriously, though, if that’s really your average spend, I would be fascinated to read more about how you achieve it, and my wife would be interested in recipes…

  6. This is a great way to look at dividends.
    I try to buy groceries from unilever brands! And shop at a ahold store
    It would s the same approach

    Cheers,

    Pollie

  7. Interesting – but do the mortgage and auto include principle or only the interest? In theory at the end of the loan you’d have an offsetting asset. Also, if WFC were owned it could be considered an income producing (in addition to a drain) asset as last I checked they were the transfer agent for at least 6 of your companies. 🙂

  8. This is basically the same concept I’m working toward right now. I try to buy companies from who’s products I personally love to use, That way iIm helping pay into my own investments in a way.

    • Dilligent,

      NICE! So I’m not the only one? Haha. That’s the best part – buying companies in products that we use every single day – JNJ, PG, UL, GIS, etc.. all fit the bill. Loving it and thanks for sharing.

      -Lanny

  9. The closest I can come was my last dividend on 10 shares of BUD was $23.00, enough for a case of Budweiser. Too bad they only pay out every six months.

    • Brian,

      HAHA! Hilarious and actually spot on! If you went through a case of Bud per year, you’d be fine : ) Now, if you take down a few cases here and there – better grab some more shares! Have to love owning a stock that you can see not just yourself, but SO many others enjoying! Keep it up!

      -Lanny

  10. That is how I look at it every month after review my monthly dividend payout I figure what bills it would cover. This gives me the insight to what the future will hold as far as covering all my bills.

    Cheers
    Dividend Pursuit

  11. Good post DD. While I don’t match my bills to corresponding dividends, the larger approach is essentially similar, to generate enough passive income to live on. While I don’t strictly follow DGI strategy, the appeal of a diversified divided portfolio of well run companies is strong and it is clear to see why.

    • Ten factorial Rocks –

      Thank you for the kind comment. It comes down to – saving as much as you can with living an enjoyable life, investing what you are able to and build income streams to cover expenses : ) The more and earlier on you can do that – the closer/younger you can be to be financially free. So excited for that part!

      -Lanny

  12. Most of our dividend/interest payments are all reinvested, however, we recently built a custom dream home in a new community and our real estate taxes will go sky high (from $4K to maybe as high as $16K) . So our pension income will not absorb that increase and we will have to use some of our earnings for that purpose. Otherwise, thus far, we’ve just been letting the payments go back into investments to help grow our net worth.

    • Kathy –

      HOLY!!! That’s quite the leap for property taxes, must be a gosh damn amazing dream home : ) And yes – I reinvest currently, but then at some point, will turn off reinvestment to actually use them for the monthly expenses : ) Cannot wait to start actually doing that! Congrats on the dream home!

      -Lanny

  13. I really like the approach of trying to match up the dividend paying stocks to the bills they would cover! It’s tough to come up with fun ways to motivate people to invest, but I think this is a good one – well done!

    • Jon –

      Thanks! Yes, need to keep it interesting sometimes, keep those juices flowing a bit. I may have bought a stock or two this week that help pay for other things, one may have been mentioned above! The other – let’s just say – it definitely recoups any trading costs one could have when investing : )

      Fun times!

      -Lanny

  14. You know, I haven’t paid much attention to dividend investing. The first time I learned about it, it was highly recommend to older investors who crave more security from their investments – not so much for younger investors who “should” be focused on growth long-term, which is the category I fall under.

    But I just bought my first house and will be moving in next month. I’ll have to pay for my own bills now (I’m moving from my parents). The idea of building up investments that pay dividends to pay for my bills sounds brilliant!! Bills are those things you can never pay off so if there was a way to deal with these forever, I’m interested! Where does one start though??

    • I think you will quickly find a lot of benefit to being a long term dividend growth investor as you comb through the various dividend blogs out there. Each has its own inspiring story.

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