Anyone who invests in individual shares and wants to build up an additional cash flow with the help of dividend stocks through regular distributions receives several motivational sweets at the same time. On the one hand, the regular payments motivate investors to make further and further savings installments and, ideally, to increase them continuously in order to obtain even more company shares. In times of crisis, companies bounce back with their dividends, which are generally always based on the previous year, making it easier to hold out in hard times.
In addition, you can set yourself another motivational goal with the help of dividend stocks: Through my stock investments, I want to pay for my streaming subscription every month or my burger and coffee. By investing in a company, you can get its products for free for life. But it sometimes takes a lot of money to do that.
High investments are partly a prerequisite
Using the historical prices and dividend yields in the table, one caramel macchiato from Starbucks per month requires 35 shares and an investment of 3,050.25 euros. The monthly Ben & Jerry’s ice cream requires 41 Unilever shares, or 1,869.60 euros. A monthly Big Mac requires 13 McDonald’s shares, or 2,986.10 euros.
Microsoft 365 requires 38 Microsoft shares, or 10,505.10 euros; Apple Music requires 143 Apple shares, or 21,843.25 euros. The mobile plan in the example requires 707 Deutsche Telekom shares, or 11,842.25 euros. Buying the Nike shoes or the LVMH champagne every month requires investments of 177,301.75 euros and 155,088.00 euros respectively. For one purchase per year, the corresponding amounts are 14,786.05 euros (113 Nike shares) and 12,924.00 euros (18 LVMH shares).
A few examples:
Historical example from February 2022: All prices are in euros. The product price is the cost of one purchase per month; the dividend yield is annual. The number of whole shares is rounded up from (product price × 12) / (share price × dividend yield). Taxes, fees and changes in prices or dividends are excluded. These figures are not current prices or guaranteed income.
| Company | Product | Price | Share price | Dividend yield | Number of shares | Investment |
|---|---|---|---|---|---|---|
| Starbucks | Caramel Macchiato | 5.25 | 87.15 | 2.07% | 35 | 3,050.25 |
| McDonald’s | Big Mac | 5.29 | 229.70 | 2.18% | 13 | 2,986.10 |
| Unilever | Ben & Jerry’s ice cream | 5.99 | 45.60 | 3.88% | 41 | 1,869.60 |
| Microsoft | Microsoft 365 Single | 7.00 | 276.45 | 0.80% | 38 | 10,505.10 |
| Apple | Apple Music | 9.99 | 152.75 | 0.55% | 143 | 21,843.25 |
| Deutsche Telekom | Magenta Mobil S | 39.95 | 16.75 | 4.05% | 707 | 11,842.25 |
| Nike | Air Force 1 | 129.99 | 130.85 | 0.88% | 1,355 | 177,301.75 |
| LVMH | Dom Pérignon Vintage 2012 | 199.00 | 718.00 | 1.54% | 216 | 155,088.00 |
It should also be noted: In Germany, dividend payments are taxable after the allowance of 801 euros for singles applicable at the time of publication in 2022, which makes the investment even higher. The illustration shown here was made without taking the tax into account. Incidentally, an alternative to cash payments can be dividends in kind.
How do I do it?
I, too, use dividends as an additional motivational tidbit, but I do different math. I break down my annual monthly expenses, such as rent, insurance, electricity or telecommunications to the day and always mark a day on the calendar when my dividend payments have funded the next day. This way I always know how many days I can already cover in a year without depending on others like my employer. So I keep a kind of freedom calendar that starts over every year and covers several extra days each year.
Keyfacts
- via the cash dividend, theoretically products of a company can be consumed free of charge
- but for this it needs sometimes quite high position sizes of several thousand euros
- however, it can be a good motivator to stay on the ball
- I keep a kind of freedom calendar
