How I’d Invest $25,000 Today to Reach $1 Million

If I’m aiming for $1 million in the next few years, then these are the first and foremost dividend stocks I’m picking up for major growth.

| More on:
money cash dividends

Image source: Getty Images

It can be hard for many Canadians to see into the future these days. With the Bank of Canada raising interest rates to 4.5%, all we’re currently thinking about is how we’re going to afford our daily lives! However, given the way the market is performing, I’d say it could potentially be the best time to invest if you want to reach $1 million.

Why now?

The TSX continues to perform poorly compared to the most recent highs. Shares are down about 5.5% year to date, which is an improvement, sure. However, economists believe we could enter a recession in 2023 that could last halfway through the year. So again, it’s hard to invest at these levels believing there could be a further drop.

But here’s the thing. The stock market will recover. It always does. Look at the past few decades if you don’t believe me; it’s simply the nature of things. Still, if you want to reach $1 million, you’ll want solid companies that can get you there.

So if you’re sitting on $25,000 right now, look at this as a time to invest at a discount. You can pick up shares in companies you’ve been dying to own for years. And if it were me, these are the top I would choose.

Top stocks to reach $1 million

If you want solid growth, that’s one thing. But another consideration I would bring to the table is dividends. Those dividends will certainly help you reach $1 million sooner, as you can use them to reinvest in your shares. So what you want are solid growth stocks that offer dividends, and have for decades.

First up, I would pick up a company like goeasy (TSX:GSY). goeasy has seen record earnings results, including remarkably high loan originations in its most recent report. However, goeasy stock continues to trade down, 33% year to date! So you can lock in a substantial opportunity, with a 3.17% dividend yield as well. Meanwhile, shares are still up 1,649% in the last decade alone! That’s a compound annual growth rate (CAGR) of 33.1%, even after the recent drop.

I would also consider something a bit more stable as well, but still with a large growth opportunity. For this, I would look to BCE (TSX:BCE). As the country’s largest telecommunications stock, it offers a substantial growth opportunity with its 5G and fibre networks, but with a larger customer base to support growth. Shares are even with January 2022, but even still BCE provides a deal, and dividends are yielding 5.77%. Plus, shares are up 150% in the last decade for a CAGR of 9.6%.

Divide and conquer

So let’s look at the math here. Let’s say you’re going to divide your $25,000 between these two stocks. You’re then going to reinvest dividends year after year, in the hopes to eventually reach $1 million. Here’s how that would break down.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDTOTAL PAYOUTFREQUENCY
GSY$116108$3.64$393.12quarterly
BCE$63.45197$3.68$724.96quarterly

As you can see, those investments already bring in $1,118.08 in passive income per year. That’s certainly a lot to reinvest in these stocks. Now if we were to see the same amount of growth that we have in the last decade, and reinvest those dividends, it would take about 14 years to reach $1 million with dividends reinvested! All from investing just $25,000.

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.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Payday ringed on a calendar
Dividend Stocks

Portfolio Payday: 3 TSX Dividend Stocks That Pay Monthly

Investors can expect to earn monthly dividend income for life by adding these three TSX stock to their portfolios.

Read more »

A plant grows from coins.
Dividend Stocks

3 Cheap Canadian Stocks That Offer 7% Dividend Yields

Retirees looking to build pension portfolios have an opportunity to buy great TSX dividend-growth stocks at discounted prices.

Read more »

dividends grow over time
Dividend Stocks

2 Dividend Stocks That Can Generate $2,000 in Passive Income by 2025

Investing in high-dividend stocks such as Whitecap can help you generate $2,000 in annual passive income by 2025.

Read more »

edit Woman calculating figures next to a laptop
Dividend Stocks

Should You Invest in BCE Stock for its Dividend?

BCE stock is not yet out of the woods. But this article could change your perspective about the stock and…

Read more »

sale discount best price
Dividend Stocks

Bargain Hunting for Dividends: 3 High-Yield Stocks Haven’t Been This Cheap in Years

Enbridge (TSX:ENB) stock's key enterprise value multiple reached a new multi-year low recently. BCE remains a high-yield dividend play while…

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

Cash in Your Pocket: 3 TSX Dividend Stocks That Pay Out Monthly

Bolster your monthly income with these three dividends stocks that act like regular paycheques.

Read more »

A plant grows from coins.
Dividend Stocks

Beat the TSX Index With These Cash-Gushing Dividend Stocks

These cash flow-rich stocks are more likely to gush passive dividend income streams long into the future.

Read more »

Golden crown on a red velvet background
Dividend Stocks

Here Are My Top 5 Dividend Aristocrats to Buy Right Now

Canadian National Railway (TSX:CNR) is a Dividend Aristocrat with 27 years of dividend growth.

Read more »