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