My wife and I were daydreaming about retirement the other day when the subject of dividends and distributions came up. In looking at our current monthly expenses and thinking ahead here are some things that dividends might eventually pay for.
VOIP home phone
We avoid spending any dividend income earned today from our investments because we remain in savings mode; we need to build assets for our future selves. Daydreaming ahead paying for our VOIP home phone could easily be covered by some dividend income in the future, it’s only a few bucks per month.
There are more and better reasons to own telecommunications stocks than this but this is one reason: might as well own what we consume. Our internet bill in the future might be covered by the dividend income we earn from the telco stocks.
Gas and insurance for our cars
We have two cars now, this old clunker and a newer 3-year-old vehicle. We’ve been talking and we’re thinking we might only need one car years down the road so working towards that. Back to my point, cars need some form of energy to run on. By investing in energy companies that pay dividends I figure we can eventually use the income generated from these energy stocks to pay for gas, insurance and maybe even the maintenance for at least one car.
Canadian bank stocks have a long, established history of paying dividends and increasing their dividends regularly. I figure property taxes are a similar constant. Property taxes also have only one direction to go I think, so owning Canadian banks that raise their dividends could be a nice inflation-fighter. Some of our dividend income in the future could pay for our property taxes year after year without touching the capital.
Dividends (and distributions from Exchange Traded Funds (ETFs) for that matter) are not everything but they are tangible for the patient investor and very real in the bank account. Even though I will index invest more going forward hopefully a good portion of our retirement expenses can be derived from the income generated by our investments. This way our capital can remain intact for an unknown and ever-changing future.
What might dividends pay for in your life?