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Yes, people use income from investments to pay for things.
And if you had put 50k in ATT a year ago to do that, today your initial investment would only be worth 44k today. Hardly a "free" car.
If my math is right, you're looking at more like $180 depending on taxes, but yeah, AT&T has a super high yield at around 5.5% which is pretty sick.
That being said, if you look at the stock, it is down 11% in last 52 weeks when the market has been up 20%...and there is no guarantee that the company/stock won't slide further. It's a space that has a lot of competition and a lot of pressure on margins as the hardware manufacturers (ie Apple) have a lot of the power....so it's not like your $50k is just sitting there in cash, safe as can be :-)
If you were going to go with a high dividend strategy, might be best to spread things around, maybe $10k into 5 different high dividend paying stocks in different sectors.
I own some O which has a similar dividend but plays in a different industry (real estate = also prone to crashes :-)
Luckily I also own some DLBS as a hedge to that...
Dividends are issued quarterly so you'd have to theoretically bridge intra-quarter. Assuming you're rational in managing a portfolio with respect to diversification, if you are holding a $50K position in any one stock, I feel like you should be driving a more expensive car.
This guy just asked if you could use cash to pay off car leases. Don't confuse him with diversification yet.
Yeah, you're right, I won't. ALso, just to clarify, ther are some stocks that pay monthly dividends, just not most and not T. I personally like dividend yielding stocks in the BDC sector.
Yes you can use dividends to pay for your car. Is it the best use of your money? Maybe not. Assuming you get a loan from a credit union bank for 5-6% (or whatever the rate is, im not sure, maybe would be higher if you don't collateralize it with the vehicle) and you think you can only get an equal return of 5-6% in the market, you should be indifferent about it. If you can get higher return for your money in the market, then I would say get the higher return and reinvest the money; pay for the car payments out of your own pocket.
It really is a question of what your goals are, but you most definitely can do that if you'd like to.
Just re-read the OP as it is about leasing. Just think of the opportunity cost, you putting 50k away to pay for your leased car. Personally I'd rather investment 50k and pay 200/month for the car but that is my style. Don't forget about insurance, gas, and all the other costs that come with having a car.
cheers
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