While looking at potential high-return TSX stock investment opportunities today, it strikes me how seemingly easy it can be for Canadian investors to steadily double their money through buying and holding dividend-paying stocks and reinvesting the payouts. Canadian dividend stocks can help investors build wealth and be happier in their golden retirement years.
How can Canadian dividend stocks double my money? Regular dividends provide a dependable “base” annual return on your investment. They do the heavy lifting. You will need a smaller change in stock prices each year to reach your desired total return goals on invested capital each year.
One golden rule of thumb, the Rule of 72, estimates how much return you need to double your money in a given period. An 8% yearly return could double your money in just nine years!
Three Canadian dividend stocks on my radar today could easily generate total returns above 8% per year over the next decade. They have the visible potential to double a patient investor’s money over the next decade. Let’s have a closer look.
CT REIT
CT Real Estate Investment Trust (TSX:CRT.UN) is a Canadian real estate investment trust (REIT) that should generate sizeable stable returns that may double your money in under a decade.
The trust pays well-covered and steadily growing monthly income distributions. Its recently raised distribution (by 3.5%) should yield nearly 6% annually. Equity units thus need to rise by just over 2% per year to achieve the 8% total annual return needed to double your money in nine years.
CT REIT owns more than 370 retail properties in Canada. Its properties are fully occupied with a strong 99.2% occupancy rate by March 31, 2023. New development projects are fully leased out with a 99.4% committed occupancy.
The trust has a robust real estate portfolio that should support recurring dividends and attract high valuation multiples once the Canadian real estate market recovers again.
Distributions remain well covered given a low adjusted funds from operations (AFFO) payout rate of 72.8% during the first quarter. CT REIT has raised its distributions every year for more than a decade. It’s a Dividend Aristocrat you can trust to grow your capital.
Dream Industrial REIT
Dream Industrial Real Estate Investment Trust (TSX:DIR.UN) is another Canadian REIT that could make dividend stock investors’ dreams of doubling their money come true.
It owns 321 properties fully occupied properties with 70.4 million square feet of gross leasable area. Dream Industrial REIT is capitalizing on rapid rent growth on highly sought industrial assets to grow its rental income.
The trust signed new leases and lease renewals at an average spread of 41% over expiring rents during the first quarter. Net rental income increased by 24.7% for the first quarter to $81.5 million.
How to double your money? The trust pays a monthly distribution that yields 5% annually. Distributions are safe given a payout rate of 68% of funds from operations. Unit prices need only rise by 3% every year during your holding period to double your investment. And that’s doable because they are already undervalued.
Dream Industrial units had a net asset value (NAV) of $17.03 per unit by March 31, 2023. They trade at a discount to NAV and have a 24% upside potential, as the Canadian real estate market roars back to life.
Canadian Natural Resources stock
Canadian Natural Resources (TSX:CNQ) is an $80 billion oil and gas giant that recently committed to distributing 100% of its growing free cash flow during the current oil super cycle. The Canadian dividend stock could easily double your money in under a decade if oil prices continue to cooperate.
How CNQ stock can double your money? The energy stock’s quarterly dividend yields 4.8% annually. It has raised its dividend for 23 consecutive years. The dividend is well covered and may be sustained, even if oil prices fall towards CNQ’s breakeven West Texas Intermediate benchmark price in the mid-US$30s.
After reducing its net debt level by $10.7 billion in two short years to $10.5 billion, CNQ intends to pay out all its free cash flow to investors through dividends and share repurchases going forward.
Share repurchases will be a strong driver of total shareholder returns in the future. The remaining shareholders will own a growing stake in CNQ stock without lifting a finger.
