As you can see from the theme of my site, cruising is something that I enjoy. My first cruise was in 2021 on the Symphony of the Seas on the Royal Caribbean ship.
Typically when I travel, I always enjoyed having full control of my vacation, from the hotel I stay, in to each restaurant that I wanted to try. So the idea of boarding a ship and abiding by the ship's food options or the ports it docked at sounded stuffy and restrictive to me. But after I went on my first cruise, it was far from my expectation. I did not know how good it was until I tried it for myself.
Why it appealed to me was that I was able to let go of having to ensure that everything was taken care of. Having to make sure that everyone in your party is happy with the food options, and getting around safely took away a lot of energy when you should really be relaxing. However, on a cruise ship, everything is in one place. The rooms are an elevator away, the food options and restaurants are included, and there is a variety of activities that fit everyone's needs. I did not have to plan for once and was able to just enjoy the vacation.
Of course, there are a lot of add-ons if you want to experience things like the specialty restaurants or go on an excursion tour on-shore, but these are all optional and you do not have to do any of these things. You can simply go on a tour on-shore on your own, or skip the specialty restaurants that are on board. You can also pay for the restaurants as you go, just go for one special dinner.
Additionally, paying more for an Oceanview Balcony was something that I enjoyed as sleeping with an ocean view and an ocean breeze is a unique experience that I cannot experience at home. As we liked to relax in our room instead of taking advantage of all the activities that occur on a ship, it was worth the additional cost to us.
Being in the middle of the ocean, gave me a relaxing time to spend time with my family and just stare out at the vast blue ocean. When our children are a bit older and can explore on their own two feet, we will travel on a traditional vacation and explore cities on land. But for now, cruising is a good option for parents with young ones who have less mobility.
I wanted to figure out how I can cruise often and for cheap
To cruise more often, with work-from-home being more normalized, can be more feasible than ever before without having to be retired to do so.
To help alleviate the financial burden of the cruise fare, one method that I decided to pursue was a stock dividend. Pre-pandemic, cruises were cash cow companies and attracted many investors by paying out big dividends to their shareholders. Carnival paid over 7%, while Royal Caribbean paid over 4%.
Therefore, in order to earn a $3,000 dividend per year to fully pay for an upgraded room like mine for example, you would need to invest $75,000 in the Royal Caribbean stock, receiving a 4% annual dividend to receive that.
However, the dividend rate received is different for all investors because the effective rate of your dividend is based on your cost basis. If the cost basis that you purchased is half of the current share price, and the stock price has doubled since you purchased it, you would only need to have invested just $37,500 in order to receive the same amount of dividend. Now your effective dividend rate would be 8%.
$3,000 current dividend = 8% effective
$37,000 original investment dividend rate
I know this is a large sum of money and a hypothetical price doubling. However, this is possible as travel companies are highly cyclical and their share price can fluctuate greatly. Since I personally believe in the Royal Caribbean company and its survival, I purchased the stock during the pandemic in the $35 range.
Since then it has doubled to $64 a share. Also if the stock goes up further than that to let's say $100/share, you would only have to invest $25,000 in the above example to get the same amount in dividend. No matter how much the price fluctuates, I will continue to invest in the company for the long term and buy even more when it goes down (read: Easy Method to Investing).
I think the human cycle is the same no matter what generation you are born in. As one gets older, cruising will be appealing to the current generation as it was to the previous generation as cruises provide convenience and less mobility.
The rate of return will be different for everyone, and you can play around with your numbers to see how much dividend you want to receive to subsidize your cruise. This concept can be applied to any stock with many stocks offering even more dividends than this one (like in the chart above). But I find it enjoyable to invest in a company that I believe in and will be grateful and content to receive just enough to get one free cruise per year.
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