Build a $1,000,000 Nest Egg Quickly With 2 Royalty Stocks

You need dividend stocks to build a $1 million nest egg. However, if you want to reach your goal faster, you should have dividend titans like Alaris Royalty stock and Diversified Royalty stock in your portfolio.

| More on:
A golden egg in a nest

Image source: Getty Images.

Is $1 million enough as retirement savings? Whether you’re retiring at 40, 50, or 65, $1 million has always been the ballpark figure. The amount might not be sufficient in reality, but it should give you the financial cushion during your sunset years.

Building a $1 million nest egg is attainable if you have an investment plan and the discipline to see it through. Your plan should include the income-producing assets that will enable you to reach your target.

Alaris (TSX:AD) and Diversified (TSX:DIV) are the “dividend titans” that could potentially aid you to amass funds the quickest way possible. Both are royalty stocks, and you can treat the dividend payments as your royalties until you have $1 million in your nest egg.

Capital for the market leaders

Alaris has helped lower- and middle-market companies to become winners. This $785.73 million private equity fund operates uniquely from other companies in the asset management industry. The business model is not for startups and other companies with a declining asset base.

The company targets top-performing companies. Most clients are already market leaders in their own right with a historical cash flow of over $3 million. Alaris is open to assist companies across all industries to realize maximum potential. The help comes in the form of investments between $5 million and $100 million.

Alaris can be a permanent equity partner or provider of long-term financing. In providing liquidity or capital for growth and expansion, Alaris receives royalties or monthly cash distributions.

Speaking of dividends, Alaris pays 7.7% dividends. If you purchase $100,000 worth of the stock at $21.43 per share, your investment will double in nine-a-half years. The amount could grow to as much as $440,873.57 in a 20-year investment time frame, which is quite a build-up.

Building partnerships with franchisors

Small-cap Diversified pays a hefty dividend of 7.27%. With the high yield, your $100,000 would double in 10 years. If your investment horizon is 20 years, your money would be worth $406,973.01, which is massive growth.

This $332.2 million multi-royalty corporation engages in the acquisition of royalties from multi-location businesses and franchisors in North America. At present, Diversified owns the AIR MILES, Mr. Lube, Mr. Mikes, and Sutton trademarks in Canada.

AIR MILES is the largest coalition loyalty program in Canada, where 67% of Canadian households participate in the loyalty program. Mr. Lube is the country’s leading quick lube service business that brings in over $235 million of annual system sales.

On the other hand, Mr. Mikes is the operator of 42 casual steakhouse restaurants in western Canadian and has over $85 million of annual system sales. Sutton is a leader in the residential real estate brokerage franchisor business.

The Royalty Partners maintain full operational control of their respective businesses while Diversified derives royalty streams from them. With the growing royalty streams, the company can sustain dividend payments.

Nest egg builders

The sample computations above give you an idea of how dividend titans Alaris and Diversified can help you build a $1 million nest egg. By investing in both, you have powerful royalty producers in your portfolio.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends ALARIS ROYALTY CORP.

More on Dividend Stocks

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Dividend Stocks

TFSA Magic: Earn Enormous Passive Income That the CRA Can’t Touch

If you're seeking out passive income, with zero taxes involved, then get on board with a TFSA and this portfolio…

Read more »

Man with no money. Businessman holding empty wallet
Dividend Stocks

2 Stocks Under $50 New Investors Can Confidently Buy

There are some great stocks under $50 that every investor needs to know about. Here’s a look at two great…

Read more »

think thought consider
Dividend Stocks

Down 10.88%: Is ATD Stock a Good Buy After Earnings?

Alimentation Couche-Tard (TSX:ATD) stock might not be the easy buy-case it once was. Here’s a look at what happened.

Read more »

money cash dividends
Dividend Stocks

TFSA Dividend Stocks: Earn $1,200/Year Tax-Free

Canadian stocks like Fortis are a must-have in your portfolio to earn tax-free yields for decades.

Read more »

sale discount best price
Dividend Stocks

1 Dividend Stock Down 11 Percent to Buy Right Now

Do you want a great dividend stock down 11% that can provide years of growth potential? Here's one heavily discounted…

Read more »

Growth from coins
Dividend Stocks

1 Grade A Dividend Stock Down 11% to Buy and Hold Forever 

If you're looking for the right dividend stock at the right price, you're going to want to consider this insurance…

Read more »

Target. Stand out from the crowd
Dividend Stocks

2 Dividend Stocks to Double Up on Right Now

Are you looking for dividend stocks to buy right now? Here are two top picks!

Read more »

edit Taxes CRA
Dividend Stocks

Tax Time: How to Keep More of Your Money

Nearly everyone hates paying taxes, although Canadians can lessen the financial pain with the right tax strategies.

Read more »