Parents need all the help they can get when it comes to finances — especially now. There seems to be this thought that diapers are the most expensive thing for babies, but I can tell you, that’s not that case. No, it’s fruit and vegetables, and it’s only getting worse!
Parents might be in a constant battle of scraping together pennies just to make sure they can keep their kids fed. And it’s exhausting. That is why any type of financial supplement can be considered sent from above.
Today, I’m going to show you how to boost your income both now and for years to come with one solid dividend stock.
BCE stock
The dividend stock I would consider for parents today has to be BCE (TSX:BCE). First off, it has a high dividend yield currently at 6.27%. However, it’s also offering value. A recent deal between Rogers and Shaw has many wondering how BCE stock will continue to thrive. Honestly, it’s not likely to change much.
BCE stock continues to offer the fastest internet speeds and expand its telecommunications infrastructure across Canada. While the stock has been around for about four decades, the company is far older. There is just very little chance it’s suddenly going to go from a position in the number one spot to going up in smoke.
Shares are up 32% in the last decade, which would usually be more but for the drop in the markets right now. The dividend stock is now down about 10% in the last year, offering a great deal for those wanting to pick it up and see returns climb.
Buying for income today
If you’re looking to buy BCE stock as a dividend stock that will offer you income today we’ll consider a few things. Let’s say that BCE stock returns to former 52-week highs in the next year. You have $5,000 you want to invest, and so you’ll get dividend income from that as well.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND (ANNUAL) | TOTAL PAYOUT | FREQUENCY | TOTAL PORTFOLIO |
| BCE: Today | $61.79 | 81 | $3.87 | $313.47 | Quarterly | $5,000 |
| BCE: 52-week highs | $69.44 | 81 | $3.87 | $313.47 | Quarterly | $5,624.64 |
From just this method alone, you can see you’ll receive returns of $624.64 from that $5,000 investment. Add on the dividend income, and you’ll have a grand total $938.11 in passive income should it reach 52-week highs!
What about long-term re-investing?
Let’s say you’re not desperate for passive income, but as a parent you want to simply be prepared. Creating an emergency fund over the long term is therefore a very strong option. Now, let’s say you see your dividend income reach 52-week highs from that $5,000 investment. From there, we continue to see similar growth as what we’ve seen in the last 10 years.
In the case of this dividend stock, BCE stock has risen by a compound annual growth rate (CAGR) of 4% in the last decade. Its dividend in that time has also grown by a CAGR of 5.2% in that time as well. So, if you were to invest that $5,000 and hold it for 10 years, reinvesting dividend income along the way, here is what you could end up with. As well, we’ll consider that shares increase 13% by the second year.
| Year | Stock Price | Dividend | Dividend Yield | Dividends Received | Shares Purchased | Total Shares Accumulated | Stock Value | Total Investment |
|---|---|---|---|---|---|---|---|---|
| 1 | $61.79 | $3.87 | 6.27% | $313.47 | 5 | 86 | $5,313.47 | $5,000 |
| 2 | $69.95 | $4.39 | 6.28% | $377.54 | 5.41 | 91.41 | $6,400.49 | $6,027.70 |
| 3 | $81.82 | $4.61 | 5.63% | $397.46 | 5.06 | 96.47 | $7,900.45 | $6,927.70 |
| 4 | $94.98 | $4.85 | 5.11% | $418.10 | 4.74 | 101.21 | $9,617.33 | $7,827.70 |
| 5 | $109.74 | $5.11 | 4.66% | $440.46 | 4.44 | 105.65 | $11,577.54 | $8,727.70 |
| 6 | $126.40 | $5.37 | 4.24% | $464.97 | 4.16 | 109.81 | $13,800.74 | $9,627.70 |
| 7 | $145.23 | $5.65 | 3.89% | $491.12 | 3.90 | 113.71 | $16,308.82 | $10,527.70 |
| 8 | $166.56 | $5.94 | 3.57% | $519.62 | 3.66 | 117.37 | $19,126.05 | $11,427.70 |
| 9 | $190.78 | $6.26 | 3.28% | $550.28 | 3.43 | 120.80 | $22,278.25 | $12,327.70 |
| 10 | $218.43 | $6.59 | 3.02% | $583.92 | 3.22 | 124.02 | $25,792.32 | $13,227.70 |
As you can see, by the end of 10 years you could have a portfolio worth $13,227.70 from your initial $5,000 investment!
