3 Dividend Stocks that Will Pay for Your iPhone
You might be wondering now if it’s really possible for dividend stocks to pay for your brand new iPhone upfront. I will be giving you easy to follow strategies for that.
The new iPhone is coming out and maybe it’s time to upgrade your 90s era Motorola… but at a price upwards of $800, how do you find the money without breaking your budget? In this video, I’ll show you how to turn three dividend stocks into an iPhone payment plan, how these three stocks will pay for your new iPhone every time! We’re talking dividend stock investing, today on Let’s Talk Money!
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New iPhone Set to Release in September
Nation the new iPhone is set to release this September and while it probably won’t be a major design change, it’s still expected to sport a faster A-series processor, a new 5G chip and increased battery life.
Apple has sold more than a billion iPhones since its 2007 launch and there are more than a few people planning on picking up the new one in September.
Now the value investor in me has never been able to bring myself to put down the kind of money for an iPhone and early rumors are the new one could be the most expensive yet. Just going off the last model as a reference, the 64 gigabyte carrier model was $799 without some kind of data plan discount.
But with a little planning, I’ve found three dividend stocks that will actually pay for every new iPhone you get!
In this video, I’ll show you those three dividend stocks and then reveal an iPhone dividend strategy that will pay for your phone!
We’ll be using Stockcard.io to research the dividend stocks. I’ll leave a link to Stockcard in the video description. Click through and then go to Portfolios in the top menu, you’ll find the Bow Tie Nation portfolio in this Stock Picks section. It’s free to follow and you’ll get email notifications whenever I buy or sell from the portfolio.
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3 Dividend Stocks That Will Pay for Your iPhone
Let’s get started here and first I’ll show you those three dividend stocks before revealing the strategy and how much to invest to pay for your new iPhone. First though, I want to get your opinion on this. Do you use your dividends or your investments to help pay for current spending or is your portfolio strictly a nest egg kind of idea? So scroll down and let me know in the comments, are you withdrawing some of your investments or letting it ride for the future?
First on our list of dividend stocks is $4.5 billion asset manager AllianceBernstein Holdings, ticker AB, with its 6.8% dividend yield.
You don’t hear as much about Bernstein as you do some of the bigger asset managers like Blackrock but this is a really well run company with some strong advantages. The company has grown assets under management by an annualized 47% over the last four years and continues to attract investor assets in equities and bonds.
Bernstein has a strong catalyst in the Asia/Pacific region where it’s increased fees by a 14% rate over the last few years and while a lot of the industry is caught in a race to the bottom, shifting to those lower-fee passive products, AllianceBernstein has been able to do the opposite. The company has carved out a name for itself in active equity investing and alternatives to increase fee revenue each year.
Shares pay a 6.8% dividend yield that has grown regularly and the stock has produced a 26% annualized total return over the past five years. The company has made a clear commitment to dividends, paying out 100% of adjusted earnings to investors and growing the payout at an 11% annualized rate.
Earnings are expected at $3.38 a share this year and growing 10% to $3.71 next year which puts the stock at 13.3-times on a price-to-earnings basis. That puts it in value territory against multiples like 23-times on shares of competitors like BlackRock and Charles Schwab.
We’ve still got two more of those dividend stocks to highlight and the iPhone strategy to reveal but I want to show you how I picked these dividend stocks for the strategy.
First, I screened for stocks with a dividend yield above five percent. This is a cash flow strategy with the emphasis on payout instead of long-term growth so we want stocks that are paying out as much as possible.
I also looked for dividend stocks with a history of increasing their payouts because Apple has this annoying habit of increasing the price on its iPhone, we better invest in stocks that will pay us more in the future.
Finally here, I also screened for stocks with a positive price return over the last five years. Cash flow is important but I want to see that portfolio grow over time as well.
Next on our dividend stock list, AbbVie Inc, ticker ABBV, with its 5% dividend yield and strong cash flow growth.
Like Bernstein, AbbVie doesn’t get as much attention as other drug makers but this is a solid stable stock for any portfolio.
Besides just an overall strong pipeline of drugs and the financial strength for R&D spending to keep that up, the company has two drugs, RinVoq and Skyrizi, in phase two and three trials for expanded listings that could make them the next blockbusters with a combined $15 billion in global sales potential.
AbbVie pays out a 5% yield and has increased it by 225% since inception in 2013, that’s a 15% annualized dividend growth.
Earnings are expected at $12.57 a share this year, growing 11% to $13.92 a share in 2022 and putting it at just 9-times on a price-to-earnings basis. That’s deep in value territory for a safety stock with strong cash flows.
Our next dividend stock is a popular one, records management Iron Mountain, ticker IRM, and its 5.4% dividend yield.
The company is a physical and data storage leader with more than 1,400 facilities storing documents and data for 95% of the companies in the Fortune 1000. It’s nearly a quarter of a million customers and 93 million square foot of facility space.
Records management still makes up the largest chunk of storage and services but it’s expanding the data management component and what I really love Iron Mountain for is its recurring nature of revenue. The company has a 98% customer retention rate, which means it locks businesses in by storing their data and records, then has that recurring stream of management that is really reliable. It means you get a stock with extremely stable revenue growth and the cash flow to keep growing the dividend.
The company has some strong growth potential in expanding its data center footprint with total potential capacity of three-times its current leased capacity. That’s really going to help drive growth in data management which is a higher margin service than records.
The dividend has grown by a 5% annual rate over the last five years which is a little slower but supports a solid yield and a great 9% annualized total return in the shares. Management is guiding to as much as $4.5 billion in sales this year and $3.45 in adjusted funds from operations per share. That means the company pays out 71% of its FFO to cover the dividend which is a little high but still leaves room for growth.
You have those three dividend stocks, now the question is, how do you use these to pay for a new iPhone?
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How to Use These 3 Dividend Stocks to Pay for Your New iPhone
Analysis by Asymco found the average lifespan of an Apple device at four years, three months…but who wants to wait four years for a new phone?
So instead, let’s plan on changing out your iPhone every three years. At an estimated price of $799 for each phone, that means you need to collect $267 a year in dividends to buy a new phone.
Now the average dividend yield of our three dividend stocks was 5.7% and that’s on a yearly basis. You’ll collect four dividend payments a year from each of these but the yield will be the same.
To find out how much you need to invest to collect the $267 in dividends each year, we divide that amount by the 5.7% dividend yield for an investment of $4,678 or $1,560 in each of the three dividend stocks.
Now before I get a lot of comments about how if you had $4,600 to invest then you would just go out an buy a new iPhone…remember, this strategy buys you a new iPhone EVERY three years. If you were to just spend that money to buy a new phone, $4,600 divided by $800 then you’d be about broke after five phones.
Instead, with this dividend investing strategy, you’ll collect enough in dividends to buy a new phone every three years FOREVER. Plus, you’ve got that money growing in the three stocks and can eventually afford to get yourself something nice…like a Samsung.