If you’re aiming to make a lot of money in a short period of time, as in 12 years, then it’s going to take one thing. That’s consistency – the consistency to continually invest what you can towards your future goal of, in this case, $1 million.
But it is possible! To get there, you need to choose the right dividend stock and the right amount to invest. By following these steps, you are more likely to meet your investment goal. You could, indeed, create a million-dollar portfolio in just 12 years.
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Choose the right dividend stock
For this example, I’m going to look at Slate Grocery REIT (TSX: SGR.UN). Slate is a great option because it trades in value territory, offers a high dividend yield, and provides exposure to grocery retail locations across the United States.
This is important, because as the company proved during the pandemic, groceries are essential items that will continue to be needed no matter what happens in the future. So that means you’ll continue to see cash flowing in. In this case, thanks in part to a 97% occupancy rate, coupled with long-term lease agreements.
Next, how much can you invest?
Now, I’m going to be doing the math here for you so that you can see how much you would need to invest on a consistent basis. However, you need to also take into consideration what’s right for you. There’s really only one way to do this, and that’s to see your financial advisor.
Your advisor will help you set up your investment portfolio so that’s it’s filled with a diverse set of investments. That includes everything from long-term conservative growth, to perhaps short-term passive income.
However, for the purpose of this example, we need to figure out how much we should invest specifically in Slate stock today, and over time, to reach the $1 million mark.
How much to make a million?
Again, I’ve done the heavy lifting here for you. However, it’s important to take into consideration what works for you. In this case, you need to first create a base investment, and then add to it over time. We’ll base this investment on the assumption that historical growth for Slate stock will continue at a similar pace. That’s a compound annual growth rate (CAGR) at 3% in share price and dividend.
| Year | Shares Owned | Annual Dividend Per Share | Annual Dividend | After DRIP Value | Annual Contribution | Year-end Shares Owned | Year-end Stock Price | New Balance |
|---|---|---|---|---|---|---|---|---|
| 1 | 9750.00 | $1.18 | $11,549.13 | $142,970.13 | $20,000.00 | 12065.32 | $13.83 | $166,898.41 |
| 2 | 12065.32 | $1.22 | $14,720.44 | $182,228.74 | $20,000.00 | 14545.01 | $14.25 | $207,235.70 |
| 3 | 14545.01 | $1.26 | $18,278.19 | $226,271.19 | $20,000.00 | 17204.95 | $14.68 | $252,488.26 |
| 4 | 17204.95 | $1.29 | $22,269.46 | $275,680.39 | $20,000.00 | 20062.41 | $15.12 | $303,255.04 |
| 5 | 20062.41 | $1.33 | $26,747.09 | $331,110.32 | $20,000.00 | 23136.15 | $15.57 | $360,207.97 |
| 6 | 23136.15 | $1.37 | $31,770.34 | $393,294.62 | $20,000.00 | 26446.60 | $16.04 | $424,100.86 |
| 7 | 26446.60 | $1.41 | $37,405.70 | $463,056.34 | $20,000.00 | 30015.93 | $16.52 | $495,779.37 |
| 8 | 30015.93 | $1.46 | $43,727.74 | $541,318.84 | $20,000.00 | 33868.31 | $17.01 | $576,192.22 |
| 9 | 33868.31 | $1.50 | $50,820.15 | $629,117.95 | $20,000.00 | 38030.00 | $17.52 | $666,403.72 |
| 10 | 38030.00 | $1.55 | $58,776.81 | $727,615.77 | $20,000.00 | 42529.59 | $18.05 | $767,607.88 |
| 11 | 42529.59 | $1.59 | $67,703.01 | $838,115.96 | $20,000.00 | 47398.16 | $18.59 | $881,144.20 |
| 12 | 47398.16 | $1.64 | $77,716.92 | $962,081.09 | $20,000.00 | 52669.58 | $19.15 | $1,008,515.41 |
As you can see, you need to start out with 9,750 shares at today’s share price of $13.43. That’s a hefty investment at $130,942.50. From there, you would add $20,000 per year. Even so, that’s a total investment of $370,942.50 to end up with $1 million in just 12 years. I’d say it’s worth the investment, if you can make it.
