I love having the latest Samsung flagship phones but hate paying for them. Luckily, I can use high-yield dividend stocks to cover this expense.
The best part of dividend investing is using it to pay your expenses. Eventually, you can use dividends to pay all your bills, making you financially free.
But let’s not get ahead of ourselves. Today, I want to review how to lower our cellphone bills first and then invest enough in high-yield dividend stocks to cover the expense. Let’s begin.
Social Security vs. Income Investing
Lowering your cellphone bills. I remember the good old days before the iPhone was released in 2007. I didn’t have or need a cellphone.
From 2006 to 2008, I was stationed in Okinawa, Japan, without my wife (who was in San Diego). I remember going to my barracks room to use Skype to communicate with her.
I returned to Okinawa, Japan, unaccompanied again from 2020 to 2022. This time, I had the Samsung Galaxy S8. Communicating with my wife while holding this powerful device was so much easier.
Cell phones are good but expensive. I could save a lot of money by switching to Clear Talk or another “secondary” brand. But honestly, I love Verizon stock, so I don’t mind paying their higher prices for cell coverage.
My cell bill through Verizon (VZ) is $225/month. I have three adults with phones and one Apple Watch. One phone is paid off, and I will pay the other two off in about six months.
Still, $225/month is a lot of money. I plan on keeping these phones for 4-5 years. As much as I love getting the latest and greatest Samsung phones, now is not the time to add extra expenses.
Create Additional Streams of Income
The magic of high-yield dividend stocks. A high cell phone bill requires a high-yield dividend stock. I will consider stocks that yield over 5% for this experiment as high-yielders.
Let’s start from the beginning. What are dividend stocks? Dividends are a portion of the profits that companies pay shareholders.
You can find low-paying/high-growth stocks like Visa (V) and Mastercard (MC). Alternatively, you can track down high-paying/low-growth stocks like Altria (MO) and Verizon (VZ).
I like to invest in both, with a focus on high-paying stocks. I am a hardcore income investor, meaning I invest specifically for the return on investment through dividends.
As an income investor, I want the company to return its profits to me now. While it’s great if the company continues to grow, that’s not my top priority.
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Here are some high-yielding stocks. The list of high-yielders will continue to shift and move along with the markets.
The key is always to look for great companies that the market misprices, which will raise their yield.
I found a CVS (CVS) stock that yielded 6% for about two months. I was lucky to purchase 50 shares before the price shot back up.
Before we get into specific stocks, let’s discuss the dividend payment schedule. Most companies pay quarterly dividends; therefore, we must purchase stocks to cover all the months.
The groups are January (Jan, Apr, July, Oct), February (Feb, May, Aug, Nov), and March (Mar, Jun, Sep, Dec). Now, we will explore some great stocks.
January – Altria (MO) – Tobacco company that yields 7.41%
January – Bank of Nova Scotia (BNS) – Canadian Bank that yields 5.84%
February – AT&T (T) – Communication company that yields 5%
February – Verizon (VZ) – Communication company that yields 6.34%
February – British American Tobacco (BTI) – Tobacco company that yields 7.81%
March – Prudential (PRU) – Insurance company that yields 5%
March – T Rowe Price (TROW) – Financial company that yields 5%
March – Pfizer (PFE) – Pharmaceutical company that yields 6.54%
You can find more great dividend stocks in my article “My 24 Favorite Blue Chip Dividend Stocks.” Be warned that these yields can change at a moment’s notice.
As treasury bond yields begin to decrease, high-quality, high-yield dividend stocks will start to sell at a premium. So get them before they turn HOT.
Budgeting to Financial Freedom
It’s time to invest in our stocks. Now, it is time to put our money where our mouth is. We need to generate a total of $2,700 in annual dividend income—divided by three stocks.
For today’s example, I will use Altira (MO) for the January group, British American Tobacco (BTI) for the February group, and Pfizer (PFE) for the March group.
Each group needs to produce $900 in annual income. We can divide $900 by each stock’s yield to determine how much to invest.
To generate our $2,700 annual dividend income, we need to invest $12,145 in Altria (MO), $11,523 in British American Tobacco (BTI), and $13,761 in Pfizer (PFE).
To generate enough dividend income to pay our cell phone bill each month, we must invest a total of $37,429. Is saving this amount possible?
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The magic of dividend growth investing. Yes, it is possible to save this amount of money. It may not even take you very long if you are a high-earner.
The magic of dividend growth investing is that these companies aim to increase their dividend payment annually. When you pair their dividend raises with your cellphone price reductions, you create a magical situation.
Let’s say the three companies increase their dividends by three percent each of the next five years. Your dividend income would go from $2,700 to $2,781, to $ 2,864, to $2,950, to $3,038, and finally to $3,130.
Therefore, in five years, without adding any additional capital, your portfolio would generate $3,130. Imagine reducing your cellphone bill to $180, leaving you $80 per month of cash flow from dividends.
This stuff works as advertised. In July 2021, I received a $19.03 dividend from Phillip Morris on my Cash App. Four years later, in Jan 2025, I received a dividend of $23.03.
That’s a 21% increase plus my investments from $1,555 to $2,638—a 70% increase. So, the value of my holding increased, plus my dividend payments. I must be in heaven.
Investing is Essential for Freedom
Conclusion. Although I am a hardcore income investor, I cannot understate the power of dividend growth investing.
If you get your money into these powerful stocks, you will reap the benefits of compound interest. Additionally, you can pair this with the power of living below your means.
You can have a great life where your investments fund your lifestyle. All you must do is find a way to generate cash flow to invest.
Cash flow is the difference between income and expenses. You can create cash flow by budgeting every penny that comes into your household.
It may not sound fun, but you will ultimately be the winner. As you can see, your dividend growth investing will continue to compound in your favor.
Why should you be the only one working toward your financial freedom, when your stocks can assist? All you must do is hire them. Good Luck!
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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. All Right Reserved Military Family Investing
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