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

thinking
Dividend Stocks

Should You Buy BCE Stock for its 8.6% Dividend Yield?

Down over 20% from all-time highs, BCE stock offers you a tasty dividend yield in 2024. But is the TSX…

Read more »

grow dividends
Dividend Stocks

How Long Would It Take to Turn $20,000 Into $100,000 With TSX Dividend Stocks?

Here's how high-quality TSX dividend stocks and the power of compound interest can help grow your investments by 400% or…

Read more »

Paper airplanes flying on blue sky with form of growing graph
Dividend Stocks

2 Soaring Stocks I’d Buy Now With No Hesitation

These two stocks may be the most expensive on the market, but they're high for a reason! And I'm still…

Read more »

Hour glass and calendar concept for time slipping away for important appointment date, schedule and deadline
Dividend Stocks

Invest $374.50 Each Month to Create Passive Income of $288 in 2024

Investing a specific amount each month to create passive income this year is possible with monthly dividend payers.

Read more »

Happy retirement
Dividend Stocks

2 Stocks to Help Turn $100,000 Into $1 Million

If you want to reach $1 million, $100,000 can certainly get you there. Even if you invest in some low…

Read more »

warning or alert
Dividend Stocks

Income Alert: These Stocks Just Raised Their Dividends

There's no shortage of companies that raised their dividends recently. Here's a trio of options to consider buying now.

Read more »

Business success with growing, rising charts and businessman in background
Dividend Stocks

Don’t Look Now, But These 3 TSX Stocks Look Poised for a Nice Rally 

Three TSX stocks are in a downtrend amid headwinds. 2024 may be rocky for them, but they are poised for…

Read more »

protect, safe, trust
Dividend Stocks

3 Safe Dividend Stocks to Beat Inflation

These three dividend stocks are excellent buys to beat inflation, given their solid underlying businesses and high yields.

Read more »