The earlier you start saving for your retirement, the better. That’s one of the golden rules of retiring rich. But that’s not in your hands if you are already midway towards your retirement. What you can do is pick great stocks that can help cover what you missed in those early lost years. But you also have to consider balancing your investment portfolio in such a way that you don’t end up in a worse position than you were when you started.
Dependable Dividend Aristocrat
Canadian Utilities has been one of the most dependable Dividend Aristocrats on TSX. The company has a glorious history of increasing dividend payouts for 46 consecutive years. It’s also a very stable company, dealing in the ever-green business of utilities. That means the company’s gradually but continuously growing revenue streams, and consequently its dividends, can be counted on.
The dividend yield is nothing to scoff at either. At 4.28%, the company will be paying you about $856 a year if you redirected $20,000 of your TFSA to it. You can count on those increasing dividend payouts as a secondary revenue stream to either use as a passive income or to augment your retirement savings.
A high-yield REIT
REITs are known for generous dividend payouts. True to the sector’s tradition, True North REIT is offering a juicy yield of 8.25%. With $20,000 in this company, you will be getting yearly payouts of $1,650. The company hasn’t slashed its dividends once in the past five years. And seeing the less-turbulent market value than other REITs and a beta of 0.78, this commercial-focused REIT might fare better than the broader sector.
A fast-growing stock
Air Canada has been one of the fastest-growing stocks in the past five years. The company has grown its market value by about 337% in the past five years. This equates to a compounded annual growth rate of 34.33%. Despite soaring so high, Air Canada stock has seen very little significant turbulence in the past five years, and the stock has grown like clockwork.
$20,000 in this stock would be worth around $87,000 in the next five years if the stock keeps growing at the same rate.
In 20 years…
Let’s say that dividends from Canadian Utilities and Air Canada stay the same, and you are reinvesting in shares. And say we cut Air Canada’s growth down a bit, about 25% a year. If you keep contributing $6,000 yearly to your TFSA, the returns after 20 years can be fantastic. At a rough estimate, you easily stand at a chance of earning about $2,000,000 after 20 years of compounding.
The numbers don’t always pan out the same way. You might offshoot the number by far, or you may earn something under it. But the bottom line is that with the right investment, and enough time on your side, retiring rich is not only possible, but it’s also highly plausible. How rich you can get depends on your tolerance for risk, your selection of stocks, and, to a certain extent, the stock market in general.
BRAND NEW! For a limited time, The Motley Fool Canada is giving away an urgent new investment report outlining our 5 favourite stocks for investors over 50.
So if you’re looking to get your finances on track and you’re in or near retirement – we’ve got you covered!
You’re invited. Simply click the link below to discover all 5 shares we’re expressly recommending for INVESTORS 50 and OVER. To scoop up your FREE copy, simply click the link below right now. But you will want to hurry – this free report is available for a brief time only.
Fool contributor Adam Othman has no position in any of the stocks mentioned.