Recent surveys have painted a bleak picture of retirement preparedness in Canada and the United States. Many respondents have resigned themselves to work into retirement or to carry on without an adequate amount of savings for the future. This is a recipe for disaster, especially as the cost of living continues to go up in Canada.
Millennials started the decade apprehensive about the stock market. It was easy to understand why after the most damaging financial crisis since the Great Depression. More and more, millennials are starting to play a more active role in the market. With home ownership on the decline, the stock market will be an important vehicle for wealth building in this key demographic.
Today, I want to look at three stocks that millennials should target to start this decade. These equities are well positioned for long-term growth and could be the key to an early and fruitful retirement.
Shopify
If you were fortunate enough to get on the ground floor with this stock, you may already be retired! Shopify (TSX:SHOP)(NYSE:SHOP) has been an absolute monster since its IPO back in May 2015. Just over the past year, the stock has climbed 194% as of close on January 30.
Investors can expect to see its fourth-quarter and full-year results for 2019 in early February. Shopify has grown into a giant in a very promising sector. Market Study Report recently projected that the retail e-commerce software market is set to grow to $6.9 billion by 2024, up from $4.5 billion in 2019. This would represent a CAGR of 11% over the forecast period.
Even famed short-seller Andrew Left has capitulated in the face of Shopify’s massive rally. Earlier in January, Left called the Shopify story “too large for us to get our little hands around.” Shopify has its sights set on international expansion to start this decade, and it is a Canadian success story that looks like it will continue to reward investors going forward.
Park Lawn
Park Lawn (TSX:PLC) has been another success story over the past decade. Its stock has climbed 26% from the previous year as of close on January 30. The company provides goods and services associated with the disposition and memorialization of remains in Canada and the United States. Morbid as it is, a historically high senior population in both countries means that these services will see an increase in demand in the coming years and decades.
In the year-to-date period up to Q3 2019, Park Lawn has seen revenues increase 58.2% to $175 million. Adjusted net earnings have posted 57.9% growth to $17.5 million, and adjusted EBITDA has soared 70.25 to $39.8 million. Park Lawn excellent balance sheet has set it apart from its competitors in this industry. This has freed it up to make aggressive acquisitions across North America that will fuel growth.
Shares of Park Lawn also offer a monthly dividend of $0.038 per share, which represents a modest 1.5% yield.
Royal Bank
The last stock I want to focus on in this article is Canada’s largest financial institution: Royal Bank (TSX:RY)(NYSE:RY). Banks are not the most exciting investment, but they have been extremely consistent in providing growth and income for investors decade after decade. Shares of Royal Bank have climbed 9.6% year over year as of close on January 30.
In 2019, Royal Bank reported 6% earnings growth in its Personal and Commercial Banking segment. This was primarily due to average volume growth of 7% and improved margins due to higher interest rates. There may be pressure on this latter point coming into 2020, as the Bank of Canada is rumoured to be mulling a rate cut. Royal Bank also reported 13% earnings growth in Wealth Management and 4% growth in Insurance.
Royal Bank is a juggernaut on the domestic front and one of the most important banks globally. It carries a flawless balance sheet into 2020 and is a reliable dividend payer. The bank last increased its quarterly dividend to $1.05 per share. This represents a 4% yield.
