Phone Bill: How much cash could cover it for life?

In today’s world, just about everyone has a cell phone bill which they must pay. Often, this bill is due monthly. Cell phones have become a staple of modern day life, and this monthly cost can vary greatly from person-to-person, depending on the phone they’ve picked up (on contract) to the data plan they commit to.

Canadian Telecoms are Price Gougers

I consider myself fairly lucky to have been grandfathered into my 8 GB for $40 a month plan. The Canadian telecoms retain their oligopoly by devouring any smaller telecoms which appear on the scene. For example, Wind Mobile was fought over but ultimately sold to Shaw Communications and Manitoba Telecom was purchased by Bell, with the customers being split between Bell and Telus so that they could garner regulatory approval. And now in 2022, Rogers is attempting to acquire Shaw Communications for $26 billion. Thus, the average Canadian does not have any choice but to pick one of the Big 3 across the majority of Canada. As a result, consumers have been completed gouged over the years.

While it’s no fun being a victim of price gouging, you can ease the pain by participating in the stock market and purchasing some of these companies. The dividends received from owning these stocks can go towards your cell phone bill. Essentially, the money they’re gouging from you and your fellow Canadians, can be put back into your pocket to pay for that exact bill.

In other words, the cash you would receive in dividends from the Canadian telecommunications giants would nullify your cell phone bill. However, you have to save up a big chunk of money to invest in order to receive adequate cash flow to cover the phone bill.

Covering a $40 Phone Bill

With tax and fees included, a $40.00 phone bill comes out to $47.64 per month in 2022, which is $571.68 a year.

Telus pays a dividend of $1.31 per year. Thus, to cover that $571.68 annual phone bill, one would require 437 shares of Telus. At $33.33 a pop, it would cost me $14,565.21… That’s a lot of money, sure; but the investment value should grow as time goes on too. Therefore, you keep the cash and are rewarded with a paid off monthly phone bill.

If I was to attempt to cover this bill with a different telecom investment, such as Bell, it would cost a total of $10,974.60 to purchase 156 shares which would yield $574.08. Finally, if I were investing in Rogers, it would cost a total of $19,622.46 (much more!) to purchase 286 shares to yield $572.00. Additionally, the reason it costs so much more to cover your bill by investing in Rogers is due to it’s relatively low dividend yield of 2.9%, while Telus and Bell yield 3.9% and 5.2%, respectively.

Now that’s a lot of cash to save up – but the reward – covering your phone bill for the rest of your life, is well worth it. Like all other bills, investing for dividends is one great way to become financially independent – it’s simply interesting to achieve such a thing by investing in the same sector as your bill came from.

While it would cost that much to be able to cover a $40 cell phone bill outright, the number obviously varies depending on the bill. Nowadays, It’s not uncommon to have $100 cell phone bills either.

Covering a $100 Bill

For the sake of completeness, let’s look at how much it would cost to cover a $100 phone bill by receiving dividends from an investment for each of the Big 3 Telecoms.

Saving up $14,565 can be a lot easier than saving up $30,563 to invest in the stock market to generate enough dividends to pay off your phone bill. And, this is a great demonstration of how having your bills under control makes it a ton easier to achieve financial independence.

Well, there you have it – you now have the knowledge to calculate for your self exactly how much cash you need to bank to cover your phone bill. Also, the thing about investing to pay off your bills is – all your bills can function exactly like this. We just demonstrated a baseline cost for covering $100 in monthly bills. If your entire portfolio was to pay out the same yields as these telecoms then it’s some very simple math for you to find out right now what you’d need to achieve financial independence.