Over the last several months, I have been increasing my position in AT&T. In fact, the Top 5 Foundation Stock has become one of the larger positions in my dividend stock portfolio. When preparing my November dividend income summary, it hit me. My AT&T dividend covers my interest bill. You guess it, I use AT&T for my internet. This article discusses the topic further and WHY this is such a big deal.
AT&T Investment Summary
Owning AT&T has been quite the journey for me. I began investing in dividend stocks in 2012. Phillip Morris International (PM) was the first dividend stock I purchased. Does anyone want to take a guess which company was the second stock I purchased? You guessed it…AT&T (T).
See: Our ENTIRE Dividend Stock Portfolios are Disclosed on our Website
Over the years, my position grew. Quarterly, we reinvested each dividend to receive additional fractional shares. The reinvested dividends quickly made an impact and produced additional dividend income. Of course it would, given the company’s very high dividend yield.
Read: The Power of Dividend Reinvesting
In addition to reinvested dividends, I strategically purchased new shares of the company when the performed well in our dividend stock screener. After the pandemic started, AT&T’s stock price collapsed. At the beginning of the year, AT&T was trading close to $40 per share. After the pandemic, their stock was suddenly trading below $30 per share. That is when we made significant purchases of the company. AT&T was yielding almost 8% at its lowest point in 2020!
Watch: Our Simple 3 Step Dividend Stock Screener
The fun didn’t just stop with my dividend portfolio. Like me, my wife has been investing in dividend growth stocks as well. She too has been growing her AT&T position and adding to her investment in the company in 2020. Combined, the two of us have amassed quite the position in the wireless giant. The table below summarizes our current investment and the dividend income we receive from AT&T.
In total, we own 350.394 shares of AT&T. This dividend produces a staggering $728 of dividend income annually. This is definitely one of the companies in my Top 3 dividend paying stocks (See Lanny’s Top 3). However, while I was reviewing my November dividend income and preparing my monthly dividend income article, I finally connected the dots and realized something VERY EXCITING.
Our AT&T Dividend Covers Our AT&T Internet Expense
Now this is where the fun really starts. I am going all in to the AT&T family! We use AT&T internet in our house. Prior to a few weeks ago, we had 100 mbps download speeds for $55 per month, plus taxes and fees. I have used their service for years and am very happy with the quality of our internet. The videos on our Youtube channel upload quickly, that’s for sure.
However, we recently switched our cell phone service from Verizon to AT&T. The Black Friday promotional credits were just too great to pass up. With the bundling of services, we received a $20 per month discount on our internet service. That dropped our monthly internet bill to $35 per month, plus taxes and fees. In total, out of pocket, it will cost us $41.24! In total, we are spending just under $500 on internet annually. 
That is when the light bulb turned on. I had this AH HA moment when preparing my dividend income summary. The dividend income we receive from AT&T easily covers our annual internet expense. In fact, since that $20 per month bundle discount was added, it isn’t even close! 
Why This is a Big deal
How cool is that? The dividend income from an investment covers the same expense in that category. We cannot emphasize this enough. This is a BIG DEAL. Why is that?
We are relentlessly pursuing financial freedom by investing in dividend growth stocks. The goal is build a passive, dividend income stream that covers our monthly expenses. We are both frugal guys, if you haven’t picked up on that by now. Step by step, investment by investment, we are working our way towards this goal.
Lanny covered this topic extensively several years ago with an article titled “Buying Dividend Stocks to Pay Bills.” He breaks down the largest line items in a typical budget and suggests dividend stocks to purchase to generate a dividend income stream to cover that monthly line item. For example, you can cover your monthly insurance expense by investing in AllState or Travelers! Don’t forget about having your monthly electric bill covered by an investment in Consolidated Edison! Hopefully, as you can see, this isn’t a new topic on our minds. It is a very cool and fascinating idea.
Internet is not my largest monthly expenditure. However, it is a bill that we will continue to incur before and during retirement. Heck, managing this website with Lanny would be very difficult we didn’t have internet in our house. Mentally though, this is a very cool milestone to hurdle. One budget category is taken care of by investing in a stock in that category. In fact, we have plenty of room left over.
Further, in 2020, we crossed another huge dividend investing milestone. My wife and I crossed $12,000 in forward dividend income. Our overall dividend income, after crossing this threshold, officially covered our monthly mortgage expense. Since that article, we have continued to purchase more dividend stocks and grow our dividend income. Going forward, we will receive at least $13,000 in dividend income annually. We can comfortably say that our portfolio’s total dividend income can cover our monthly mortgage payment, internet bill, and a few others.
Summary – AT&T Dividend
The journey towards financial freedom isn’t a fast one. It takes time to build your investment portfolio. By making every dollar count, you can invest an extra $10 here and there and push your dividend income forward. The purchases add up and make a difference.
Tomorrow, I won’t wake up and have all my monthly expenses covered. However, I will wake up tomorrow having one of my monthly budget expenses covered. Our internet bill will be covered by the dividends we receive from the same company we purchase the service from. Again, I can’t say it enough, how fun is that? All this does is continue to motivate me to continue investing and buying dividend stocks. One day, soon enough, all of the line items on my budget will be covered by our income.
Do you have a similar situation as me? Where a budget expense line items are covered by your passive income?
Bert