The Secret to How I Paid Virtually Nothing to Heat My Home Last Year

The dividends this Fool earned from his energy investments paid his gas bill.

Mar 30, 2014 at 12:30PM
Money Side

Photo credit: Flickr/Daniel Borman.

"Do you know the only thing that gives me pleasure? It's to see my dividends coming in."
-- John D. Rockefeller

While I don't love dividends to the same degree as John Rockefeller, I'm still a pretty big fan of dividend-paying stocks. One reason is simply that dividends are great for offsetting bills I hate to pay.

For example, last winter I paid my natural gas utility a grand total of $666.55 to provide natural gas to heat my home. However, thanks to my investments in oil and gas companies, I was paid $650.38 to offset that gas bill. Because of those dividends I basically paid virtually nothing to heat my home last year. That'll probably be the case again this year, and the year after that, and so on and so forth as the dividend payments from my energy investments continue to pile up in my account.

My energy dividend stocks
I've been building out my energy dividend portfolio for years in the hopes of one day offsetting my total energy spend. For most of last year I owned five energy dividend stocks. These holdings included LINN Energy (NASDAQ:LINE), LinnCo (NASDAQ:LNCO), Enterprise Products Partners (NYSE:EPD), ConocoPhillips (NYSE:COP), and Phillips 66 (NYSE:PSX). I've owned LINN Energy and Enterprise Products Partners since 2007, while ConocoPhillips joined my portfolio in the aftermath of the financial crisis.

 Linn Energy Ladder

Photo credit: LINN Energy LLC.

Because I've owned LINN Energy and Enterprise Products Partners for so long, I have a much lower cost basis and significantly higher yield than investors buying today. In fact, I'm earning a more than 10% yield on my initial investment in both. Similarly, my investment in ConocoPhillips is yielding more than 5%, and I was given shares of Phillips 66, which I now also hold.

Add up the income from just these five holdings, and I've offset nearly 100% of my natural gas bill from last year. I do still have a way to go when I add in what I spend on gasoline, as just 19% of my total energy spend from last year was offset. However, over time I hope to offset 100% of my energy consumption through both personal energy efficiency as well as adding more energy dividends to my portfolio.

Why I have no plans to sell
All five of my energy dividends have delivered for me over the long term. Not only has each holding delivered solid capital gains, but all have consistently raised the payout since my initial investment. Phillips 66, for example, has nearly doubled its payout since going public just two years ago. Meanwhile, Enterprise Products Partners has raised its distribution to investors like me every single quarter since I bought my units.

Bakken Conocophillips

Photo credit: ConocoPhillips.

I expect to continue to see increased dividends from all five holdings in the years to come. ConocoPhillips, for example, is planning to grow both its production and its margins by 3%-5% annually through 2017. As it does, I expect to see some of the increase in profits sent back my way. Similarly, both Enterprise Product Partners and Phillips 66 are investing billions to build out critical infrastructure to move and process all of the oil and gas that drillers like ConocoPhillips and LINN Energy expect to produce in the years to come. This visible growth is why I'm confident that my income will keep heading higher in the years to come. That's why I have no plans to sell, despite what Jim Cramer thinks.

Investor takeaway
It took about seven years of slowly buying energy stocks, but last year I was able to offset one of my energy related bills. Instead of spending that cash to pay bills I've elected to reinvest it into new energy dividends. That plan, along with new investments along the way, will one day allow me to be energy independent as I work my way toward total financial independence.

The IRS tax loophole that let's you keep more energy income
You already know record oil and natural production is changing the lives of millions of Americans. But what you probably haven't heard is that the IRS is encouraging investors to support our growing energy renaissance, offering you a tax loophole to invest in some of America's greatest energy companies. Take advantage of this profitable opportunity by grabbing your brand-new special report "The IRS Is Daring You To Make This Energy Investment." Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free. 

Matt DiLallo owns shares of ConocoPhillips, Enterprise Products Partners, LinnCo, Linn Energy, and Phillips 66. The Motley Fool recommends Enterprise Products Partners L.P.. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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