Prospective retirees are constantly looking for investments that could help them amass a fortune on or before retirement. There’s also the awareness that a comfortable lifestyle is not possible if you were to rely on a pension plan. The wealthy retirees today had invested long before and grown riches from dividends.
Investors who envision retiring wealthy should look into the energy infrastructure space. The best operator today is none other than Pembina (TSX:PPL)(NYSE:PBA). This $26 billion pipeline juggernaut is a cut above the rest. You should be setting your sights on this company to increase your chances of retiring rich.
Pembina is a unique dividend payer. Most dividend-paying companies reward investors every quarter. This top-quality energy stock, however, routinely pays dividends monthly. In 1997, the company started paying quarterly dividends but changed to a monthly mode the year after.
Dividend greatness is one of Pembina’s attractions to income investors. There were years that the yield remained constant. But in each of the last eight years, Pembina made sure to increase dividends. From 1997 to the present, the company shelled out $7.9 billion in dividends alone.
In the recent decade, the total return of the stock, including the reinvestment of dividends, was 369.91%. If your 20-year investment horizon begins today, your $200,000 could be worth over half-a-million dollars in 2040, given Pembina’s present dividend of 4.96%.
Excellent growth potentials
Dividend greatness is not the only factor that makes Pembina a great buy. Measure the viability of your investment prospect in terms of the business itself and its potential growth. If the growth outlook is weak, the possibility of a dividend cut exists, and it could wreck your long-term financial goals.
Also, can Pembina’s operations endure and protect your money during a bear market or economic downturn? This oil and gas midstream company has a pipeline network that stretches 10,000 kilometres. Natural gas and petroleum products pass through this network until it reaches the end users in North America.
Pembina can afford to grow its dividend payouts to shareholders because the business is continually growing through aggressive expansion of operations. The company has plenty in its war chest to make needle-moving purchases. The recent acquisition of Kinder Morgan Canada should fortify Pembina’s industry position.
The said acquisition includes a portion of Kinder Morgan’s Cochin Pipeline in the United States. These assets translate to an instant boost in earnings and cash flow. Pembina made a promise to increase the dividend by 5% once the deal concludes this year.
The period from 2020 to 2023 should see more activities, as $5.7 billion worth of expansion projects under construction are due to come online. Aside from these projects, there are more expansions in development ($3 billion). Pembina is also considering investing $6.5 billion in a liquefied natural gas terminal in the U.S.
Choice of the next millionaire
You can only retire wealthy through dividend investing if your investment choice has a strong financial profile and growth drivers. Since Pembina possesses those attributes, the chances of dividend increases yearly are not impossible.
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 PEMBINA PIPELINE CORPORATION.