In the investing world, there are multiple ways to earn money. You can invest in growth stocks at the dip and sell them at the peak, earning from capital appreciation. But that may not always work, as the stock price could also fall. If you have already burned your hands on timing the market, you could invest a small amount every month in three to five stocks and build on the share count. And if you are looking at dividend stocks, there are three ways to grow your money. Today, we will see three ways BCE (TSX:BCE) stock can earn money.
$10,000 invested in BCE in 2010 is $32,434 today
The first method is to buy the stock at the dip, lock in a higher dividend yield and enjoy the payouts that grow annually. Suppose you invested $10,000 in BCE on January 1, 2010, you could have gotten 342 shares. Given that BCE grew its dividend all throughout these years, your 342 shares would earn you $610 in 2010 and $1,365 at the end of 2024 (at a $3.99 annual dividend per share). If you add up all 15 years of dividend income, your $10,000 would have paid you $14,914 in dividends, and the value of your 342 shares would have increased to $17,520 (342 x $51.23).
Adding up the dividend and capital appreciation, your $10,000 is now $32,434.
$10,000 invested in BCE in 2010 is $39,097 today
The second method is to buy the 342 shares in 2010 with a $10,000 investment and opt for the dividend reinvestment program (DRIP). The company issues DRIP shares every quarter at a discounted price and saves you on brokerage fees. DRIP shares can be in decimal points.
For ease of calculation, I took the annual dividend amount and reinvested it on January 1st of every year. This, the below calculation might differ from the actual return, which will most likely be higher than the calculated amount.
| Year | BCE Share Price | BCE Dividend/Share | New DRIP Shares | Total BCE Shares | Dividend Income |
| 2024 | $52.20 | $3.99 | 48.89 | 708.40 | $2,826.53 |
| 2023 | $59.80 | $3.87 | 38.23 | 659.51 | $2,552.30 |
| 2022 | $66.25 | $3.68 | 31.18 | 621.28 | $2,286.30 |
| 2021 | $54.82 | $3.50 | 33.79 | 590.10 | $2,065.36 |
| 2020 | $60.25 | $3.33 | 27.81 | 556.31 | $1,852.51 |
| 2019 | $53.78 | $3.17 | 28.10 | 528.50 | $1,675.35 |
| 2018 | $60.25 | $3.02 | 22.75 | 500.40 | $1,511.22 |
| 2017 | $58.20 | $2.87 | 21.40 | 477.65 | $1,370.86 |
| 2016 | $53.05 | $2.73 | 21.32 | 456.25 | $1,245.56 |
| 2015 | $53.40 | $2.60 | 19.23 | 434.93 | $1,130.82 |
| 2014 | $46.00 | $2.47 | 20.04 | 415.70 | $1,026.79 |
| 2013 | $43.00 | $2.33 | 19.42 | 395.66 | $921.89 |
| 2012 | $43.00 | $2.22 | 17.08 | 376.24 | $835.25 |
| 2011 | $35.58 | $2.05 | 17.16 | 359.16 | $734.48 |
| 2010 | $29.22 | $1.79 | 342 | $610.47 |
A $610 dividend would buy you 17.2 DRIP shares, which will also pay dividends. So you get $2.05 dividend per share on 359.16 shares. Your money is growing from three segments: dividend per share is rising, the number of shares is increasing, and total dividend income is growing. This compounding effect could earn you $2,826 in dividend income on 708.4 BCE shares, with a per-share dividend payment of $3.99 by the end of 2024. And 708 shares would be worth $36,270, bringing the dividend and capital total to $39,097.
Other methods of investing
The third method of investing in BCE is $1,000 every year on January 1 or $100 every month since 2010. Your invested amount will grow as the stock price surges. It will also compound in the DRIP while enjoying BCE’s 15-year dividend growth history. Based on a rough calculation of a $1,000 investment every year in BCE DRIP, the dividend amount would grow from $61 in 2010 to above $1,900 in 2024.
The idea is to show you how staying invested builds up wealth in the long term. Compounding is a slow process but an effective one. And Canada has some of the best dividend aristocrats that can help you unleash its power.
Investing take away
BCE is a good stock to consider dividend compounding since it has 50-plus years of dividend-paying history. The company enjoys steady cash flows from subscription money. It is undergoing restructuring as it prepares for the next stage of 5G. Hence, you may see a decline in the 2024 profit and dividend growth rate. However, this restructuring will help BCE streamline operations and focus on growing its businesses.
