Upon reaching your late 50s or early 60s, the concept of retirement is no longer vague to you. Time flies so fast that you can be at the entry point sooner than you think. Avoid the panic attack by eliminating some habits and prepare to retire five years earlier.
Don’t hoard cash
A risk-averse individual whose preoccupation is to save and accumulate cash reserves is not a candidate for early retirement. While the practice is not at all bad, you can have more money by investing rather than keeping it idle in the bank.
Reluctance to invest
Investing in the stock market, for example, is rewarding. Although there is no money-back guarantee, owning dividend stocks is potentially very profitable. Ordinary people or regular investors who are not reluctant to invest can take advantage of the compounding effect to achieve an early retirement goal.
Not optimizing investment accounts
The Tax-Free Savings Account (TFSA) can help you realize your dream of retiring early. You can get all of the benefits of investing without the tax consequences by optimizing its use.
BCE (TSX:BCE)(NYSE:BCE) and Northwest Healthcare (TSX:NWH.UN) are wealth builders that are suitable for your TFSA. With an average yield of 6.22%, a $125,000 investment in each could produce an annual tax-free income of $15,550.
BCE is Canada’s telecom giant, with its market capitalization of $58.82 billion. The company has been operating for 140 years, but capturing future growth opportunities is still an ongoing concern. Over the past 10 years, building the best networks is its winning strategy.
The wireless wireline world is converging that in 2020, BCE will continue to expand fibre connections. The company is preparing to introduce the next-generation of wireless with mobile 5G, which management believes is the launchpad to gain a bigger market share and drive revenue growth.
In the recent Q4 2019 earnings report, net earnings went up by 12.6% due to strong EBITDA growth. BCE was able to generate nearly $900 million in cash. As such, the board announced a 5.33% increase in dividends in 2020. It’s the 12th straight year that BCE is increasing the dividend by 5% or higher.
NorthWest Healthcare is a $2.04 billion globally diversified healthcare real estate investment trust (REIT). The market capitalization of this specialist healthcare real estate investor has grown from $706.86 million in 2016 to its current level of $2.04 billion.
The attraction of this Canadian REIT is the affordable price ($12.47 per share) and its high 6.76% dividend yield. NorthWest’s real estate portfolio consists of high-quality medical office and hospital properties.
It partners with healthcare real estate experts in Canada, Australia, Brazil, Germany, New Zealand, and the Netherlands. Joint ventures, not full ownership, are driving consistent organic growth. Aside from the scaled platform, building deep tenant relationships is a contributing factor to cash flow stability.
In late January 2020, NorthWest reached an agreement with a global institutional investor. The newest team-up is a $3 billion joint-venture that seeks to pursue healthcare real estate acquisitions in Germany and the Netherlands.
Always a possibility
Early retirement is always a possibility, but eliminating the obstacles is a top priority. You should be on your way beginning with investments in dividend stocks.
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Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends NORTHWEST HEALTHCARE PPTYS REIT UNITS.