Looking for $200/Month in Alternative Income? Buy 530 Shares of This Stock

Do you want to earn $200 monthly alternative income for the next few years? Then accelerate your investments in this utility stock.

| More on:
edit Business accounting concept, Business man using calculator with computer laptop, budget and loan paper in office.

Image source: Getty Images

Having one source of income is not enough in this inflationary environment. Things will only get tough. But diversifying your income flow can reduce your financial stress. All you have to do is buy 530 shares of BCE (TSX:BCE) stock over three years.

Why BCE and not energy stocks? 

Why is BCE stock a good option for alternative income? 

Canada’s telecom market is a major contributor to the gross domestic product (GDP). This sector is led by three players (BCE, Rogers Communications, and Telus) that control more than 90% of the market. Among the three, BCE is the largest telecom operator in Canada by infrastructure and a good dividend payer. 

The last two years have been a game changer for BCE. 

BCE’s competitor Rogers is engaged in a delayed acquisition of Shaw Communications. Moreover, Rogers faced two major network outages in the last two years and paused dividend growth in 2020. 

In the meantime, BCE took advantage of 2020’s record-low interest rates to initiate an accelerated capital investment of $14 billion between 2020 and 2022 to build a 5G infrastructure and fibre network. The timing of the decision worked in the company’s favour, and it locked a weighted average cost of the public debt of about 2.8%. Around 85% of its debt is at a fixed rate, which means the rising interest rates are not significantly impacting the company’s cash flows like other capital-intensive companies. 

While other Dividend Aristocrats like Enbridge and Canadian Utilities slowed their dividend-growth rate in 2022, BCE maintained it at 5%. BCE is unaffected by the global energy crisis, rising interest rates, or inflation. This resilience of the telecom company makes it a good option if you are looking for stable alternative income in the 5G era. 

How to buy 530 shares of BCE to get $200/month in alternative income

The 5G era could probably gain its potential by 2030 when self-driving cars and smart cities become the new normal. You can make the most of this 5G revolution by investing $1,000 per month in BCE over the next three years, while the stock trades below $70 and gives a dividend yield of over 5.5%. 

$1,000 per month could convert into $36,000 in three years. In the last three years (2019-2022), the stock surged 18% with a long period of a bear market. The year 2023 could be slow for BCE stock, as the overall economic growth is likely to remain tepid. Now is your time to accelerate your alternative income investment. At an average stock price of $68 per share, $36,000 can buy you 530 shares of BCE. 

YearAverage Stock PriceTotal InvestmentNumber of SharesDividend Per Share (5% CAGR)Annual DividendMonthly Dividend
2026$68$36,000530$4.17$2,210.1$184.18
2030$68$36,000530$5.07$2,684.12$223.68
How to earn $200/month in alternative income from BCE stock.

BCE currently pays a $3.6 dividend per share annually, and it could probably maintain its 5% dividend-growth rate for another three years. If this materializes, BCE’s per-share dividend amount could increase to $4.17 by 2026. On 530 BCE shares (rounded up), you can get about $184/month in alternative income. If BCE maintains its 5% dividend-growth rate through 2030, your passive income could grow to $223/month. 

How long will the dividend last? 

BCE is a Dividend Aristocrat that has been paying dividends since 1983 without any dividend cuts. It did two stock splits that halved the dividend per share, but that did not impact the overall dividend income. The company could continue its legacy for the next several decades. Even in the worst crisis, it might pause dividend growth but not stop it. However, you cannot rule out even the slightest possibility of a dividend cut. 

Hence, I suggest diversifying your alternative income portfolio across sectors like energy, banking, and retail and asset class, like real estate investment trusts. Also, put some money in growth and resilient stocks to help your portfolio beat the market with some of the best Canadian stocks

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Puja Tayal has no position in any of the stocks mentioned. The Motley Fool recommends Rogers Communications and TELUS. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Technology
Dividend Stocks

10 Years From Now, You’ll Be Glad You Bought These Magnificent TSX Dividend Stocks

The TSX is lucrative to buy these magnificent dividend stocks in bulk and be proud of this decision 10 years…

Read more »

calculate and analyze stock
Dividend Stocks

4 Fabulous Dividend Stocks to Buy in July

Are you looking for long-term income? These four dividend stocks should not only provide you with value in July but…

Read more »

financial freedom sign
Dividend Stocks

5 Steps to Financial Freedom for Canadian Millennials

Follow these steps and nothing can stop Canadian millennials from achieving their early retirement dreams.

Read more »

Investor wonders if it's safe to buy stocks now
Dividend Stocks

We’re Only Getting Older: A Top TSX Stock That Benefits From an Aging Population

For a bet on the aging population, consider this small-cap stock with growth potential.

Read more »

Growing plant shoots on coins
Dividend Stocks

Yield Today, Growth Tomorrow: 3 Stocks to Keep Building Your Wealth

For investors seeking yield today and growth tomorrow, these top Canadian dividend stocks are certainly worth considering right now.

Read more »

Payday ringed on a calendar
Dividend Stocks

This 10.72% Dividend Stock Pays Cash Every Month

This dividend stock remains a consistent, defensive dividend producer that will give up over 10% in income each and every…

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

TFSA Investors: 2 Standout Domestic Stocks With 7% Yields

These top dividend-growth stocks look oversold.

Read more »

Dividend Stocks

2 Dividend Stocks to Double Up on Right Now

Despite their recent declines, the long-term growth outlook of these two top dividend stocks remains strong, which could help their…

Read more »