If you don’t have a whole lot to invest, no problem. Starting with just $500, you can turn any portfolio into an income producer with little risk. Instead of buying risky growth stocks, consider these three strong companies that could lead to $25,000 in returns in just one decade!
The Big Six banks are some of the strongest performers out there. Canada’s banks may dip during a downturn, but these companies end up rebounding within a year. This was true for Toronto-Dominion Bank (TSX:TD)(NYSE:TD) and others most recently. After a share tumble, the bank is back at pre-pandemic prices.
Shares in TD Bank are up a compound annual growth rate (CAGR) of 11.22% during the last decade, as of writing. The stock also offers a 3.81% dividend yield that’s risen at a CAGR of 9.81% during the same time. Growth should remain strong, as the company continues to expand into the United States as well as income-producing sectors like wealth and commercial management.
If you were to invest just $500 into this stock, add $500 each year, and hold it for a decade while reinvesting dividends, you could end up with $14,367.52.
If it’s dividends you’re after, then Fortis (TSX:FTS)(NYSE:FTS) is the stock for you. The utility company is coming up on 50 years of increasing dividends. That means it will be the first-ever Dividend King on the TSX. That comes from the company’s strong business model of acquiring businesses, growing revenue, then simply acquiring more businesses!
Shares in Fortis are up a CAGR of 9.51% during the last decade, as of writing. The stock has a dividend yield of 3.69% that’s risen at a CAGR of 5.63% during that same period. And again, because the company’s business model is so strong, you’ll barely see a blip in your return trajectory, and you’ll have growth in dividends.
If you were to invest that $500 into this stock, add $500 each year, hold it for a decade, and reinvest dividends, you could up with $11,961.98.
Finally, unlike other countries telecommunications in Canada does not have very many options. That’s why there has been such strong growth from a company like BCE (TSX:BCE)(NYSE:BCE). While the company does share the spotlight with a few others, its huge rollout of 5G should put it ahead or at the very least on par with its peers.
But the company has a strong dividend and awesome share growth compared to its competitors. The stock has risen at a CAGR of 10.57% during the last decade, as of writing. The company sports a dividend yield of 6.04% that’s risen at a CAGR of 6.43% during that time. And since telecommunications are definitely here to stay, and have been here for decades, this is one investment you’ll be sure to have by the time you retire.
If you invest $500 into BCE stock, add $500 each year, and hold it for a decade while reinvesting dividends, you could end up with $15,629.70.
Here’s how it shakes out. First, take the $500 you’re adding each year, which adds up to $5,000. That means your return for TD Bank would be $9,367.52; your return for Fortis stock would be $6,961.98; and your return for BCE would be $10,629.70.
If you invest in all three of these stocks, that’s a total return of $26,959.20 from a yearly $1,500 investment!
But don't stop there. Check out this free list of stocks!
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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 Amy Legate-Wolfe owns shares of TORONTO-DOMINION BANK. The Motley Fool recommends FORTIS INC.