There are a lot of articles out there promising early retirement, huge returns, and even bigger dividends. If you’re part of a young couple just starting out with a bunch of cash to put away, it is absolutely possible to achieve early retirement.
For instance, if you’re only 25 years old, that leaves literally another lifetime of seeing your investments grow. All it takes is finding the right options to invest in and reinvesting the dividends that ideally come with those options.
Not every stock has dividends, so it’s important to also choose a potentially great growth stock if you’re serious about retiring young. So, ideally, your portfolio should include one conservative stock, one high-yield stock, and one growth stock.
Here are three options for you to consider.
Lightspeed
Lightspeed POS (TSX: LSPD) is quickly climbing up the ranks of the tech industry mainly due to its record-breaking status since its initial public offering (IPO). The stock brought in $240 million during its IPO — the best of any Canadian company in 2019, and the best tech IPO in the last nine years.
The point-of-sale company has come on the markets just in time to take advantage of e-commerce, providing customers and merchants with an easy to use, secure solution to running a business. The company has tonnes of room to grow and has already had two stellar reports come out since its IPO. Most recently, it saw revenue rise 38% year over year, with a 40% increase in recurring revenue.
The stock trades at about $44 per share — an increase of 133% as of writing since its IPO.
WPT Industrial
Next up we have the high-yield dividend option and another potentially incredible growth option. WPT Industrial REIT (TSX:WIR.U) isn’t your average real estate investment trust. This company has also taken advantage of the e-commerce boom by investing in light industrial buildings, ideally used for e-commerce companies to both store and ship products.
The stock is also quite new, with its IPO back in January of this year. Looking at the bigger picture, this company is set up for huge long-term growth through the growing e-commerce industry. WPT, meanwhile, has had incredible earnings and is continuing to buy properties to further its growth. Its latest report saw increases pretty much across the board, with revenue and net operating income up 28.5% and 27.6%, respectively, from the same time last year, and funds from operations up 18.5% as well. Occupancy also increased to 99.4% — an incredibly high rate.
The company offers a dividend of 5.46% as of writing, but as the company grows, investors can expect the yield to increase as well.
Royal Bank
Finally, we have our conservative stock. Royal Bank of Canada (TSX: RY)(NYSE: RY) is an ideal option for investors looking for both steady, strong growth and a stable, high dividend. In fact, I would put most of your savings towards a stock like this, especially now as the markets dip.
Royal Bank currently trades below its fair value of $110 per share, offering a dividend of 4.2%, which it just increased during its last earnings report. That report was strong, with the company reporting net income of $3.3 billion for the quarter, putting the bank in a strong position ahead of a recession.
Beyond the recession, however, the bank has strong future growth with both its diverse portfolio of operations around the world — including the United States — and through it wealth and commercial management sector. These are both highly lucrative areas for the bank moving forward that investors can take advantage of.
Retiring at 50
To retire at 50, you’ll likely need to turn your Tax-Free Savings Account contribution room of $127,000 as a couple into around $1,000,000 in the next 25 years. By reinvesting dividends, and seeing an average amount of growth from each company, here’s what you would likely end up with.
- Lightspeed: an initial investment of $31,750 at 5% increase per year gives you $107,516.77 in 25 years.
- WPT Industrial: an initial investment of $31,750 at 5% increase per year, with a dividend increase of 7% per year, gives you $352,436.26 in 25 years.
- Royal Bank: an initial investment of $63,500 at 5% increase per year, with dividend increase of 7% per year gives you $412,410.89 in 25 years.
That’s a total of $872,363.92, so that’s just shy of the million-dollar mark.
