3 Stocks That Could Set You Up With Generational Wealth

Relatively few people plan for their finances decades into the future. But it’s not that difficult, especially if you plan to invest in reliable companies with strong futures.

| More on:

Nobody can plan everything for the future, but there are steps you can take to ensure that your future is as secure as it can be. Financial strength is a major part of that planning, and that planning doesn’t end with you.

If you make sound financial decisions and grow your wealth to adequate proportions, it won’t only allow you to sustain the lifestyle that you wanted and help you with a comfortable retirement. It will also allow you to leave something for the next generation.

This kind of long-term planning is a bit tricky. If you rely upon assets like bonds or gold, the price appreciation would barely keep you stay ahead of inflation, let alone build wealth. On the other hand, real estate might be too expensive to add to your portfolio. But even with their relatively volatile nature, stocks can be a great way to build enough wealth for generations to come.

There are three stocks that might be able to help you with that.

A telecom aristocrat

BCE (TSX: BCE)(NYSE: BCE) is one of the three major telecom companies that control nearly 90% of the total telecom business in the country. The company was founded in 1983 and had been increasing its dividends for 11 consecutive years. The company has a strong balance sheet, adequate infrastructure in place and is also well poised for the 5G penetration.

It’s the largest telecom company by market cap and has diversified into media and tech retail as well. The company is currently offering a ten-year compound annual growth rate (CAGR) of 10.39% and a very juicy dividend yield of 5.9%.

If you invest $10,000 in the company and put it in your TFSA (it can be transferred to your spouse) and the company can maintain a 10.3% growth each year, you might grow your nest egg to about half a million in 40 years.

The banking king

Canada has one of the most stable banking sectors in the world, and the leading bank (which is also the second-largest security on the TSX right now) is a very smart choice for building generational wealth.

The Royal Bank of Canada (TSX: RY)(NYSE: RY) is one of the few institutions in the country that can be considered too big to fail. Thankfully, that blue-chip position doesn’t come with stagnant growth.

It comes with a decent 4% yield and a 10-year CAGR of almost 11%. This is a realistic enough growth to maintain. The bank has been around for more than 150 years. It has seen recessions and market crashes aplenty and showed decent recovery potential during the great recession and the 2020 crash as well.

An asset management giant

Brookfield Asset Management (TSX:BAM.A)(NYSE: BAM) is one of the largest asset management companies in trading on the TSX. It has 2,000 assets under management, worth over US$575 billion. The assets are located in 30 countries. More than two-thirds of its assets are concentrated in North America. It has a wide variety of assets in its portfolio, including power, hospitality and healthcare industries.

The company pays dividends, but its yield isn’t compelling enough. However, it’s a decent growth stock with a 10-year compound annual growth rate (CAGR) of 16.7%. That’s enough to grow a $10,000 seed into a gigantic $1 million tree in three decades if it keeps growing at the same pace. Its global presence and a diversified portfolio might allow this company to be strong and growing for several decades.

Foolish takeaway

Investment is a long-term game. If you play it right and stay in the game for a long time, you and your next generations will eventually win. Diversification and risk management are important, but what’s even more important is the time you can give your investments to grow.

If you plant the investment seeds in the right ground (right company) now, your next generations might eat the orchard’s fruits.

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Brookfield Asset Management. The Motley Fool recommends BROOKFIELD ASSET MANAGEMENT INC. CL.A LV.

More on Dividend Stocks

coins jump into piggy bank
Dividend Stocks

This TSX Stock Yields More Than the Average Savings Account Today

Income-focused investors can start researching Enbridge stock on this dip for a potential buy for higher income for long-term capital.

Read more »

frustrated shopper at grocery store
Dividend Stocks

Inflation Eating Your Savings? This Stock Fights Back

For Canadians with a long-term investment horizon, Brookfield Infrastructure is a solid stock to potentially buy on dips and hold…

Read more »

Dividend Stocks

This 5% Dividend Stock Could Be the Ultimate Retirement Hack

This 5% dividend stock offers growing income backed by essential infrastructure assets, making it an intriguing option for retirement portfolios.

Read more »

A train passes Morant's curve in Banff National Park in the Canadian Rockies.
Dividend Stocks

This Isn’t a “Quick Win” Stock: It’s a “Steady Builder” One

CN Rail (TSX:CNR) may be the steadiest compounder on the entire Canadian stock market.

Read more »

dividend growth for passive income
Dividend Stocks

1 Undervalued Canadian Dividend Stock to Buy Now and Hold for Decades

This stock is down 15% from the recent highs and now offers an attractive dividend yield.

Read more »

House models and one with REIT real estate investment trust.
Dividend Stocks

Here’s the 6.8% Dividend Stock I Keep Coming Back To

SmartCentres REIT (TSX:SRU.UN) stands out as a near-7% yield dividend play that's worth coming back to for yield.

Read more »

Child measures his height on wall. He is growing taller.
Dividend Stocks

New to Investing? Start With This Canadian Dividend Stock

This Canadian stock has a proven record of paying dividends and consistently raising their payouts in the years ahead.

Read more »

ETFs can contain investments such as stocks
Dividend Stocks

VFV Isn’t a Complete Portfolio: Here’s What Canadian Investors May Be Missing

VFV feels like a complete portfolio, but it’s really a concentrated bet on U.S. large caps and the U.S. dollar.

Read more »