Gas prices are now the highest in U.S history, causing increased financial pain at the pump.
But what if I said that you could profit off of expensive gasoline and actually have Oil
companies pay for your gas bill.
Well… it’s true.
If you invest in Dividend paying Oil & Gas stocks, you can share in the profits of these
companies.
In this video, I’m going to explain exactly how my investments in ExxonMobil, Chevron,
and other energy stocks generate passive income that pays my gas bill.
My name is Zach and you should leave a like and subscribe to the channel if you enjoy
the video.
So first, how much do you actually spend on gas?
This depends on many factors like the fuel efficiency of your vehicle, where you live,
and how much you drive.
In the United States, the average American drives 13,476 miles a year, the average new
car gets 25.7 miles to the gallon, and the current national average price per gallon
is $4.27.
With some quick math, we can calculate that the “average” American is estimated to
spend $2,238 on gas a year.
That’s way more than I actually spend, but let’s use that number as a baseline.
Now let’s get to my stocks.
I own 152.67 shares of ExxonMobil, currently valued at $12,010.
I own 19.81 Shares of Chevron, currently valued at $3,204.
Finally, I own 112.68 shares of Enterprise Product Partners, currently valued at $2,719.
Respectively, these stocks have an on-paper total return of 112.73%, 87.6%, and 38.37%.
But this is just on paper, and I don’t plan on selling to realize these capital gains.
Lucky for me, these stocks pay out massive dividends every quarter.
I recently earned $132.96 from ExxonMobil, $27.90 from Chevron, and $51.43 from EPD.
That’s $212.29 of passive income that I could spend on my gas bill.
Over the span of a year, these investments generate $849.16 of dividend income.
This may not 100% cover the “average” American at current gas prices, but it certainly
helps.
Of course, if you invested more, then you could generate far more dividend income.
But I haven’t even mentioned the best part yet.
All 3 of the stocks I own have been growing their dividend payments every year for decades.
For example, ExxonMobil has 39 consecutive years of dividend increases.
What this means is that the dividends you receive will grow over time with no additional
investment on your end.
These payments have proven to be reliable.
Companies like Exxon and Chevron purposefully manage their financials so they can pay a
sustainable dividend throughout volatile market conditions.
We just lived through a fantastic example of this.
In 2020, Oil & Gas companies suffered arguably their worst year in modern history.
The price of Oil plummeted, ultimately going negative for a brief period of time.
The companies were losing money, yet they continued their dividend payments.
Now in 2022, the Oil market has rebounded and is the highest price it’s been since
2014.
What do you know, the companies are highly profitable once again.
I used the disaster of 2020, as a huge buying opportunity for these reliable dividend payers.
I bought ExxonMobil at a cost per share of $40.91, which gave me an 8.6% dividend yield
on cost.
This means for every $100 I invested, I’m estimated to receive $8.60 annually.
But if you remember what I said earlier, these dividend payments grow over time too.
This isn’t even beginning to touch on the idea of dividend reinvestment, which I’ll
discuss later.
So how much would you make in dividends right now buying a stock like ExxonMobil?
It pays a forward annual dividend of $3.52 per share and the current price is $78.67,
giving it a 4.47% dividend yield.
This means for every $100 invested, you’d receive $4.47.
If the so-called “average” American spends $2,238 on gas, then you’d need to invest
$50,067.
Yikes, that’s a hefty chunk of change.
However, it’s important to keep in mind that the price of gas is volatile and this
time last year the national average was over 34% cheaper at $2.81 a gallon.
This lowers annual gas spend to $1,473, meaning you’d need to invest $32,953 to cover the
cost in dividends.
You can also continue to lower that cost by using a more fuel-efficient vehicle or simply
driving less.
For example, I work from home and drive a Prius which gets 50 mpg, thus gas really isn’t
that meaningful of an expense.
So what do I do with my dividends?
I reinvest them all into acquiring more shares, increasing my future income.
Over time, this creates a powerful compounding effect, us Dividend Investors like to refer
to as the dividend snowball.
That concept is what the Dividend Data YouTube Channel is all about.
If find this idea of dividends compelling, subscribe to the channel and check out my
other videos.
Additionally, I have my research tool at DividendData.com and you can join our discord community of
like-minded investors.
Thanks for watching!