Hedge Fund Update – An Electrified Fund

I recently updated my Dividend Subsidizing Hedge Fund thanks to a reminder from a reader. I’m receiving more subsidies now in all categories. The biggest WIN is that my monthly electricity bill is now 100% subsidized by the utility industry and its partners. This means I don’t have to pay another dime of my hard earned money to pay for my electricity usage ever again (or at least for the foreseeable future.)

I have been slowly buying shares of energy distributors over the last few years, and now I finally have enough of their stocks to receive the dividends needed to fully fund all my electricity needs. It took 3 years and over $8,000 of my personal savings but it’s totally worth it (^o^) My most expensive electricity bill ever was $28, but for most months it’s under $25. To be safe I’m going to assume I spend $30 every month on electricity. However I also get $30 of dividends a month from companies in the business of providing electricity to people’s homes. This $30 dividend is kind of like a rebate, because I’m basically getting a 100% refund from the same group of people whom I just paid. If I became unemployed tomorrow, I don’t have to worry about not having power at home since my electricity bill will technically be paid for, by its own industry.

Here are the companies paying my hydro-electric bill right now.

Just Energy (JE.TO)
They sell electricity to residential and commercial clients. They currently have a dividend yield of a jaw dropping 9.75% and is traded on both the Canadian and US stock markets. Some of their products are sourced from renewable energy like wind, hydro, or biomass. I have $1920 worth of stocks in this company.

Enbridge (ENB.TO)
A pipeline company that mainly distributes gas but is also in the business of alternative energy and power transmission. Its dividend yield at 2.89% may not be as high as other utility companies but most of its growth comes from its appreciating stock price, which is up over 50% since I bought it in 2009. I currently have $1520 worth of Enbridge shares.

SNC Lavalin (SNC.TO)
A world class engineering company that makes dams, bridges, reservoir, power stations, etc. SNC doesn’t provide electricity to people, but they work closely with BC Hydro, and other utility companies. They are an essential part of the energy infrastructure in this country and around the world. And part of the reason our electricity bills keep going up is because companies that make electric generators like SNC are charging more to build and maintain them. There dividend is 2.41%, and I own $5265 worth of shares in this company.

My stock holdings in those 3 companies above provide me with $360 of dividend income per year. As long as everyone else in society is paying their electricity bills on time these companies will continue to make money, and continue to distribute dividends, which means I’ll continue to receive enough funds to cover my own hydroelectric usage.  Unfortunately there is no direct way to invest in the equity of BC Hydro (my actual electricity provider) otherwise I would. This is the bane of government operated services. There’s no competition and no way for investors to benefit if the company performs well. On the other hand, a crown corporation does keep electricity prices predictable, and makes society more stable, so I can’t complain too much.

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Jeremy @ Modest Money
04/25/2012 8:13 am

I would think it is a smart move investing in electricity companies. It’s a need that people are always going to use for the foreseeable future. As the population keeps growing, that need will just keep increasing. I also like your view of how that investment is paying for your electricity bill. If you keep knocking off bills with your investments, it’s sure to keep you motivated to keep building your portfolio.

04/25/2012 10:47 am

Thanks Jeremy. My next goal is to have my car and transportation costs completely subsidized by the automotive and oil industry.

The Passive Income Earner
04/25/2012 10:33 am

I sold Just Energy a while back as I realized they were always loosing as many customers in a quarter as they gained and figured their cost would need to grow to continuously acquire new customers. They are basically a middle man and the rates are much higher than the free market unfortunately.

Yield is great but I did not see any growth for quite a while …

04/25/2012 10:45 am

Thanks for that tidbit 🙂 I don’t know much about their client base. I was looking mainly at their financials but missed other important details like customer acquisition/retention rates. Hopefully their dividend is sustainable.

04/25/2012 8:43 pm

That’s a great way to think of your investments! I love the idea that my ownership in power corporations is paying for my electricity.

Good stuff.

Our electricity bill lately has been $50 or $60 a month because the apartment we live in is not very well insulated. We hope to get back to $30 or so in the summer!

04/25/2012 8:50 pm
Reply to  Brian

That’s quite normal if you live together with someone else. Good luck with your goal hitting $30 this summer. Thanks for dropping by.

04/26/2012 6:25 pm

You have one of the most interesting strategies I’ve ever seen on reducing your bills – turning utility company earnings into funds that pay for their own bills (so to speak). So much for being frugal – you’ve virtually paying nothing. Impressive!

04/26/2012 9:17 pm
Reply to  MyMoneyDesign

Where there’s a will there’s a way 😀

04/27/2012 5:02 pm

It’s cool to pay bills with dividends from the biller, e.g. paying your cellphone bill with Telus dividends. But what really impresses me is your hydro bill! Forgive my laziness in not using the search function, but have you written about electricity frugality before?

04/28/2012 10:07 am
Reply to  Joe

Now I want to buy some Telus shares, lol. I haven’t done a thorough post about being frugal with electricity, but that’s a good idea for a future post. In my easy savings post however I shared a way to save a lot of money on my electricity bill. Unfortunately it is a little controversial because most people either have children, or live with others who won’t approve of my method.