As many are aware, the road to riches is rarely paved. Many people get there by using their determination and putting in a lot of hard work over many years. For investors with even a little money, a long compounding period can lead to a substantial amount of wealth on the condition that no major calamities arise, and returns are average or better. This is the well-known dividend-growth approach, which has worked wonders for many investors over the years.
For those seeking an approach that has proven itself time and again, there may still be no better name than Canadian National Railway Company (TSX:CNR)(NYSE:CNI). This is a name for investors seeking a long-term asset that will never be replicated and will continue to pay dividends throughout their lifetimes. Over the past five years, shares have increased by more than 350% with the dividend increasing every year. For investors willing to be patient, this name will get the job done on almost every single occasion.
The second way to become wealthy is by delving into more speculative stocks or options that can deliver substantial returns should certain events work out very well. The downside, however, is that the losses can be 100% of the capital invested into any one stock or financial instrument if things do not work out. Shares in Canopy Growth Corp. (TSX:WEED) have performed extremely well over the past year by returning close to 300%, as the industry is set to open significantly once the legalization of marijuana takes place. Of course, time will tell how this investment plays out from here.
The third way that many investors have chosen (in an attempt) to become wealthy is by investing or mining cryptocurrencies such as Bitcoin. Although this new currency is completely unregulated and unproven, it has been an extremely lucrative endeavour to many early investors. Bitcoin is currently in excess of US$15,000 each, but as is often the case, new ways of making high profits sometimes don’t work out. Investors diving into these new currencies may want to be very cautious.
The final and most creative way for investors to become wealthy is by wagering on professional sports (where the law allows it). It was recently reported that there are now hedge funds based in the U.K. that are taking money in an effort to deliver returns for investors by wagering (and beating the odds) in professional football and soccer. Only time will tell how this one works out.
Although there are many ways to find large amounts of wealth when deploying one’s capital, the one thing that I’ve learned in the two decades that I’ve been managing my own investments is that there is no substitution for hard work. Similar to those who will analyze the data of every football game ever played, investors seeking stocks that pay dividends (and continue to grow their dividends) will have to do the heavy lifting and remain patient across all phases of the economic cycle.
For those seeking the best opportunities currently available in Canadian investments, the Motley Fool’s list of top stock for this month can be found here.
Fool contributor RyanGoldsman has no position in any of the stocks mentioned. David Gardner owns shares of Canadian National Railway. The Motley Fool owns shares of Canadian National Railway. Canadian National Railway is a recommendation of Stock Advisor Canada.