Got $6,000? Own This Stock for 100 Years

You can build a fortune with as little as $6,000. All you need it patience and stocks like Brookfield Infrastructure Partners (TSX:BIP.UN)(NYSE:BIP).

| More on:
Where to Invest?

Image source: Getty Images

Got $6,000? That’s enough to build a fortune. All you need is patience and the right stocks.

If you want to get on the path to financial freedom, pay close attention.

Compound your capital

The patience part of the equation is critical. Few investments explode in value overnight. What’s most effective is compound interest, which plays out over years, even decades. There’s a reason why Einstein reportedly called compound interest the most powerful force in existence.

Consider your $6,000 investment. Let’s say you find a stock capable of producing 12% annual returns.

After one year, your stake will be worth $6,720, a profit of $720. After year two, your money will grow to $7,526. Your annual profit totals $806. This is secret of compound interest! That longer your money is invested, the faster it grows.

The true magic occurs over decades. After 10 years, your stock investment will reach $18,600. After two decades, it’ll hit $57,900. Three decades of growth would push your initial $6,000 investment to $180,000. That’s 30 times the original sum.

To make that $6,000 hit $1 million, it’ll take 45 years. That’s a long time, but within reach for young savers. But whether you invest for a single decade or many, the important thing is to keep that capital in the market for as long as possible.

Of course, there’s one other element missing here: finding companies that can achieve 12% annual returns for decades at a time.

Find stocks like this

Brookfield Infrastructure Partners (TSX:BIP.UN)(NYSE:BIP) is a perfect fit for buy-and-hold investors looking to take advantage of compound interest. That’s because this business is taking advantage of a century-long opportunity: population growth.

The world is growing. You’re likely familiar with this fact. In 1900, 1.6 billion people inhabited the planet. In 2000, that figure hit six billion. By the end of the century, the United Nations predicts global populations will reach 11 billion.

Companies that can profit from this powerful trend will win. Brookfield is better positioned than nearly any other stock on the market. That’s because it owns assets that directly benefit from population growth.

This year, for example, it acquired cell towers in India, data centers in New Zealand, and pipeline infrastructure in North America. More people results in more demand for these projects.

Here’s the best part: Brookfield management aims to produce annual returns for equity holders between 12% and 14%. So far, it’s exceeded those targets.

Since 2009, BIP stock has risen by 404%. The SPDR S&P 500 ETF Trust, for comparison, rose by just 132%. These figures don’t even include dividends, which Brookfield has paid reliably since its founding. The dividend yield today delivers a 3.5% payout.

Brookfield is particularly well-positioned for future growth. It may even capitalize on the current turmoil, snapping up incredible assets at bargain valuations. Last quarter, the business had $3 billion of total liquidity with no significant debt maturities over the next five years.

This financial flexibility is already allowing the company to invest throughout the downturn. Last week, it announced that it will build two datacentre facilities in Mexico, anchored by long-term, U.S. dollar-denominated, multi-megawatt agreements.

But it’s not the near-term opportunities that should excite shareholders. By repeating a proven strategy, this stock can deliver double-digit returns for decades to come. You can create a fortune with just $6,000.

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.

The Motley Fool recommends BROOKFIELD INFRA PARTNERS LP UNITS and Brookfield Infrastructure Partners. Fool contributor Ryan Vanzo has no position in any stocks mentioned.

More on Dividend Stocks

grow money, wealth build
Dividend Stocks

3 Stocks That Will Make You Richer in 2024

When it comes to creating riches in 2024, these companies offer the best, most solid chance while providing dividends while…

Read more »

oil and gas pipeline
Dividend Stocks

Is it Too Late to Buy TC Energy Stock?

TC Energy is up 17% in recent months. Are more gains on the way?

Read more »

dividends grow over time
Dividend Stocks

If You Invested $1,000 in goeasy Stock in 2014, This Is How Much You Would Have Today

When it comes to growth, it's hard to beat goeasy (TSX:GSY) stock. But what should investors consider for future growth,…

Read more »

Value for money
Dividend Stocks

Better Buy in February 2024: Magna Stock vs. BCE Stock

Both Magna stock (TSX:MG) and BCE stock (TSX:BCE) have faced troublesome stock prices of late, but which is offering value?

Read more »

Growing plant shoots on coins
Dividend Stocks

3 No-Brainer Dividend Stocks to Buy With $1,000 Right Now

These three dividend stocks look like an excellent addition to your portfolio.

Read more »

A tractor harvests lentils.
Dividend Stocks

Up 6% After Earnings, Is Nutrien Stock Headed for Another Rally?

Nutrien (TSX:NTR) stock saw shares rise after reporting earnings, despite missing estimates. So, what happened, and will we see more?

Read more »

Dice engraved with the words buy and sell
Dividend Stocks

TFSA Passive Income: Is BCE Stock a Buy, Sell, or Hold?

BCE is down 16% over the past year. Is the stock now oversold?

Read more »

Retirement plan
Dividend Stocks

1 Retirement Savings Hack That Has Created Many Millionaires and Will Continue to Make More

Retirement can feel like it's just around the corner, which is why you want to be ahead of it with…

Read more »