One of the easiest ways to measure the success of your dividend portfolio is to take a look at what bills you have replace with stocks. Whether you are drawing down on the capital or receiving regular dividends, this is the only way to be truly financial free. Today we are going to take a look at some common monthly expenditures and see how much stock it would take to cover that bill.

Free Starbucks For Life

How often do you add to the 4 billion cups of Starbucks coffee that is sold annually? Do you buy coffee on occasion? Weekly? Daily? A few times a day? No matter which one, this price adds up quickly. With drinks ranging from just under two dollars to some that are over $6, it is no surprise how big of a dent this can put in your budget.

Starbucks Stock

As of this writing on July 13th 2020, Starbucks is currently trading at $73.90. It also have a forward dividend yield of $1.64. Starbucks pays its dividend quarterly and was last paid in May 2020 for the amount of $0.41. Using this information, we can figure out how much Starbucks Stock we actually need to satisfy our coffee habit.

Quarterly PurchaseMonthly PurchaseWeekly PurchaseDaily PurchaseTwice Daily Purchase
$2 CoffeeShares: 4.88
Cost : $360.49
Shares: 14.64
Cost : $1,081.47
Shares: 63.44
Cost : $4,688.22
Shares: 445.12
Cost : $32,894.37
Shares: 890.24
Cost : $65,788.74
$3 CoffeeShares: 7.32
Cost : $540.95
Shares: 21.95
Cost : $1,622.11
Shares: 95.12
Cost : $7,029.37
Shares: 667.68
Cost : $49,341.55
Shares: 1335.37
Cost : $98,683.48
$4 CoffeeShares: 9.76
Cost : $720.98
Shares: 29.27
Cost : $2,163.05
Shares: 126.83
Cost : $9,372.74
Shares: 890.24
Cost : $65,788.74
Shares: 1780.49
Cost : $131,578.21
$5 CoffeeShares: 12.20
Cost : $901.58
Shares: 36.59
Cost : $2,704.00
Shares: 158.54
Cost : $11,716.11
Shares: 1112.80
Cost : $82,235.92
Shares: 2225.61
Cost : $164,472.58
$6 CoffeeShares: 14.63
Cost : $1,081.16
Shares: 43.90
Cost : $3,244.21
Shares: 190.24
Cost : $14,058.74
Shares: 1335.37
Cost : $95,683.84
Shares: 2670.73
Cost : $271,266.95
The cost of free Starbucks

Replace your Bill with Stocks : Coffee Habit

As you can see by the chart above the cost of ‘free’ Starbucks really starts to climb the more frequently you drink it The difference between once every there months and twice daily is a magnitude of almost 270X. The other major difference depends on what you are drinking. When you increase the price of what you are drinking you also have proportional increase in the amount of money required.

Depending on the type of coffee and the frequency you drink it, you need anywhere from $360.49 and $271,266.95 in Starbucks stock. That is just to use dividends only to pay for your coffee, assuming no raises to Starbucks’ dividend. Now Starbucks’ has only been paying dividend’s since it’s latest stock split in 2015. We can assume these dividends will keep on growing but past results are not indicative of future results.

Replace Your Bill With Stocks : Phone Edition

Considering most phone plans have at least 2 phone lines on their plan and unlimited data is on every plan, we should try and figure out a way to replace this bill with the phone company stock. Today we are going to be using the phone company AT&T, which is one of the most popular dividend stocks. AT&T has an unlimited data plan for $50 a month. Let’s assume that we have two lines for a total of $100 a month. As of writing this AT&T is currently trading at $29.93 with a forward dividend yield of $2.08. Like Starbucks’ stock, the dividend is paid out quarterly. Let’s take a look at how many shares we need for different phone plans.

The Cost of a Free Phone Plan

1 Phone Line2 Phone Lines3 Phone Lines4 Phone Lines
$35/LineShares: 201.92
Price: $6,043.47
Shares: 403.85
Price: $12,086.33
Shares: 605.77
Price: $18,130.70
Shares: 807.69
Price: $24,174.16
$40/LineShares: 230.77
Price: $6,906.95
Shares: 461.54
Price: $13,813.89
Shares: 692.31
Price: $20,720.84
Shares: 923.08
Price: $27,627.78
$50/LineShares: 288.46
Price: $8,633.61
Shares: 576.92
Price: $17,267.22
Shares: 865.68
Price: $25,909.80
Shares: 1153.85
Price: $34,534.73
The cost of a free phone plan

As you can see, having a free phone plan for the whole family is significantly more affordable than fueling our coffee habit. This has a lot to do with the yield of AT&T versus Starbucks. When we have higher yields this reduce the overall capital needed to replace our bills with stocks. In turn, this gives us more capital to allocate towards other bills, or creating other streams of income. If you’re looking at creating other streams of income I suggest you check out this options guide.

Replace Your Bills with Stocks : No More Car Payment

One of the largest obstacles to building long term wealth is having too large of debt payments. One of the largest depreciation assets that people own is a car. If you are smart you pay for all your cars in cash so you don’t finance a depreciating asset. We are going to figure out a way to make sure our money is making enough money to buy our cars in cash.

The stock we are going to be using to pay for our car payment is going to be Toyota Motor Corporation. As of this writing TM is currently trading at $126.34 with a forward dividend yield of $4.05. Using this information we can determine how long it takes to afford certain cars.

1 year2 year3 year4 year5 year
$5,000Shares: 1,234.57
Price: $155,975.31
Shares: 617.28
Shares: 411.52
Shares: 308.64
Shares: 246.91
Price: 31,195.06
$10,000Shares: 2,469.14
Price: $311,950.62
Shares: 1,234.57
Price: $155,975.31
Price: $103,983.54
Shares: 617.28
Price: 62,390.12
Price: $467,925.93
Shares: 1,851.85
Price: $233,962.96
Shares: 1,234.57
Price: $155,975.31
Shares: 925.93
Price: $116,981.48
Shares: 740.74
Price: $93,585.19
$20,000Shares: 4,938.27
Price: $623,901.23
Shares: 2,469.14
Price: $311,950.62
Shares: 1,646.09
Price: $208,967.08
Shares: 1,234.57
Price: $155,975.31
Shares: 987.65
Price: $124,780.25
$25,000Shares: 6,172.84
Price: $779,876.54
Shares: 3,086.42
Price: $389,938.27
Shares: 2,057.61
Price: $259,958.85
Shares: 1,543.21
Price: $194,969.14
Shares: 1,234.57
Price: $155,975.31
$30,000Shares: 7,407.41
Price: $935,851.85
Shares: 3,703.70
Price: $467,925.93
Shares: 2,469.14
Price: $311,950.62
Shares: 1,851.85
Price: $233,963.96
Shares: 1,481.48
Price: $187,170.37
Actual Cost of a free car

Free Car for Life

As we can see the cost of a new car is significantly higher than most of every other time we replace your bill with stocks. This is because the cost of a car is so much higher than the cost of the other expenses. Most people pay somewhere between 3 and 5 hundred a month just to own their car. Instead we are focusing on creating thousands of dollars of income a year that we can use to buy our car outright.

Replace Your Bill with Stocks: Your Turn

Here we have outlined 3 different ways that you can replace your bill with stocks. Whether it is a large payment like a car or a smaller bill like a cup of coffee, it is important to not fall into the consumer mindset. When we spend without thinking about where our money is going we will often end up reducing our financial future. Instead we are focusing on becoming an owner and replacing our consumerism with ownership. When we create multiple income sources for ourselves we are ensuring our a strong financial future.

Do you use dividends to cover your expenses? Let me know in the comments below your personal strategy!

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