There are plenty of TSX stocks that could provide investors with a clear shot at $1 million. But if you’re looking at just the next 20 years, then that certainly makes things more difficult.
If you were going to have two investments at $250,000 each, then that would mean both would have to double in 20 years to make that happen. This is a tall order, and you’ll likely want to invest less than $250,000 in total.
Luckily, there are TSX stocks that can make that happen. So, let’s look at two options right now.
Two TSX stocks to consider
If you want to reach $1 million in 20 years, then you want stocks that have the best chance of getting you there. That’s easier said than done, however; while there might be some growth stocks you could consider, these could just as easily fall away.
Instead, I would look at TSX stocks that are considered blue-chip companies. These companies could be considered household names in their industry and have long histories of growth. Furthermore, these stocks should also have a solid forward-looking outlook as well.
Two TSX stocks I would consider then are Brookfield Renewable Partners (TSX:BEP.UN) and Fairfax Financial Holdings (TSX:FFH). Both of these stocks have a long history of growth, with even more due in the future.
Renewable energy should be one of the strongest investments over the next two decades, and Brookfield stock continues to be one of the largest producers in the world. Fairfax stock focuses on casualty and property insurance but has also become an asset manager that has seen its revenue increase steadily for years.
How to get to $1 million
If we’re going to make $1 million, we need to see how these TSX stocks have grown in the past. Brookfield stock currently offers a compound annual growth rate (CAGR) at 9.74%. Its dividend CAGR is currently at 9.62%. For Fairfax stock, it currently has a CAGR of 9.3%, and the dividend CAGR at 3.13% as of writing.
If we average out the two of these CAGRs, then we could see shares increase by about 9.5% on an annual basis. Meanwhile, dividends may increase at 6% on an annual basis. We’ll also average out the share price to $514 per share, so we can see about reinvesting those funds. So, let’s see how much you would need to invest, while reinvesting dividends and adding $6,000 per year, over the next 20 years.
| Year | Share Price | Shares Owned | Annual Dividend Per Share | Annual Dividend | After DRIP Value | Annual Contribution | Year End Stock Price | New Shares Purchased | Year End Shares Owned | New Balance |
| 1 | $514 | 195 | $7.61 | $1,483.95 | $101,713.95 | $6,000 | $562.83 | 13.3 | 208.3 | $109,199.59 |
| 2 | $562.83 | 208.3 | $8.07 | $1,680.27 | $118,917.76 | $6,000 | $616.30 | 12.46 | 220.76 | $126,596.85 |
| 3 | $616.30 | 220.76 | $8.55 | $1,887.63 | $137,941.76 | $6,000 | $674.85 | 11.69 | 232.45 | $145,830.73 |
| 4 | $674.85 | 232.45 | $9.06 | $2,106.84 | $158,975.08 | $6,000 | $738.96 | 10.97 | 243.42 | $167,081.45 |
| 5 | $738.96 | 243.42 | $9.61 | $2,338.65 | $182,215.74 | $6,000 | $809.16 | 10.31 | 253.73 | $190,558.16 |
| 6 | $809.16 | 253.73 | $10.18 | $2,583.96 | $207,891.80 | $6,000 | $886.03 | 9.69 | 263.42 | $216,477.42 |
| 7 | $886.03 | 263.42 | $10.79 | $2,843.60 | $236,241.30 | $6,000 | $970.20 | 9.12 | 272.54 | $245,089.54 |
| 8 | $970.20 | 272.54 | $11.44 | $3,118.57 | $267,537.30 | $6,000 | $1,062.37 | 8.58 | 281.12 | $276,652.44 |
| 9 | $1,062.37 | 281.12 | $12.13 | $3,409.76 | $302,063.40 | $6,000 | $1,163.30 | 8.09 | 289.21 | $311,474.46 |
| 10 | $1,163.30 | 289.21 | $12.86 | $3,718.35 | $340,155.16 | $6,000 | $1,273.81 | 7.63 | 296.84 | $349,874.32 |
| 11 | $1,273.81 | 296.84 | $13.63 | $4,045.44 | $382,162.90 | $6,000 | $1,350.24 | 7.44 | 304.28 | $392,208.67 |
| 12 | $1,350.24 | 304.28 | $14.45 | $4,395.64 | $415,245.92 | $6,000 | $1,478.51 | 7.03 | 311.31 | $425,639.85 |
| 13 | $1,478.51 | 311.31 | $15.31 | $4,767.03 | $465,042.01 | $6,000 | $1,618.97 | 6.65 | 317.96 | $475,808.15 |
| 14 | $1,618.97 | 317.96 | $16.23 | $5,160.99 | $519,928.24 | $6,000 | $1,772.77 | 6.3 | 324.26 | $531,096.69 |
| 15 | $1,772.77 | 324.26 | $17.21 | $5,579.05 | $580,417.63 | $6,000 | $1,941.18 | 5.96 | 330.22 | $591,987.09 |
| 16 | $1,941.18 | 330.22 | $18.24 | $6,022.49 | $647,040.20 | $6,000 | $2,125.60 | 5.66 | 335.88 | $659,071.07 |
| 17 | $2,125.60 | 335.88 | $19.33 | $6,493.26 | $720,438.52 | $6,000 | $2,327.53 | 5.37 | 341.25 | $732,937.35 |
| 18 | $2,327.53 | 341.25 | $20.49 | $6,992.90 | $801,261.78 | $6,000 | $2,548.64 | 5.1 | 346.35 | $814,259.86 |
| 19 | $2,548.64 | 346.35 | $21.72 | $7,523.25 | $890,245.76 | $6,000 | $2,790.76 | 4.85 | 351.2 | $903,780.97 |
| 20 | $2,790.76 | 351.2 | $23.02 | $8,086.31 | $988,202.67 | $6,000 | $3,055.89 | 4.61 | 355.81 | $1,002,290.31 |
It’s going to take an investment of $100,230 to reach $1 million in 20 years while adding $6,000 per year. However, it’s a far more stable way to create that $1 million rather than investing in growth stocks.
