This is a mindset post that challenges how you interact with daily occurrences in your life.
What is a ubiquitous part of most peoples’ lives these days? That phone in your pocket. Without a wireless service provider like AT&T, Verizon, or your country’s local providers they are useless outside of your wifi network. So we need to purchase wireless services. This post will outline the thinking behind how you can get your wireless service provider to pay your phone bill. In our example below, AT&T can be swapped out for your own wireless provider.
Buy Assets to Pay for Liabilities
I learned about this approach after reading Rich Dad, Poor Dad several years ago. Buy assets to pay for expenses/liabilities. This approach is simple math, but maybe it is not an approach you might have come across before.
As of today, AT&T’s average monthly wireless phone bill for a single line is $75.
As of today, AT&T’s $ dividend yield per share is a healthy $2.08 at over 6% yield due to the coronavirus crash!
AT&T pays quarterly dividends, so it’s easier to annualize our monthly phone bill. $75 * 12 = $900
Let’s calculate the number of shares we need at the $2.08 yield per share:
number of shares * yield per share = annual phone bill number of shares * $2.08 per share = $900 $900 per year / $2.08 per share = 433 shares
So to cover our annual phone bill, we would need to buy 433 shares of AT&T. At today’s prices that is about $14,000 of market value. It is considerable, but attainable for most people over a period of time.
The great thing is that since this is a dividend growth star that raises its dividends every year, the rise in phone bill will be offset at least somewhat by the number of owned shares.
Does this make sense? Have you thought about your bills or every day purchases this way? Would love to hear from you in the comments or on twitter.
Also be sure to pick up my book Too Much Money on a strategic and tactical approach to dividend investing for current income. I also have a web app to find some gems. These two tools together will help to jumpstart your investing journey!