Can TSX dividend stocks convert $20,000 into $100,000? While it is not impossible, it will take time. How long depends on the dividend yield you lock in with your initial investment of $20,000. The next aspect is the stock’s dividend growth rate. And lastly, whether you reinvest your dividends. Reinvesting your investment income can help you compound your returns.
A TSX dividend stock to invest $20,000
Enbridge (TSX:ENB) is an aristocrat known for its high dividend yields and 29-year dividend growth history. Its stock trades in the $42-$58 range and is currently trading near the lower range at around $47. Moreover, the company increased its 2024 dividend by 3.1%. A lower stock price and higher dividend per share inflated its yield to 7.8%.
The company is acquiring three gas utilities of Dominion Energy for $19 billion. The acquisition will be accretive to cash flows and help it maintain a 3-5% dividend growth rate. I don’t expect Enbridge to accelerate its dividend growth rate for another five years as it focuses on building gas pipelines. It may later increase its dividend growth rate to 5%.
How long will it take Enbridge stock to convert $20,000 into $100,000?
If you invest $20,000 today, you can buy 425 Enbridge shares, giving you $1,555 in annual dividends. If Enbridge increases its dividend growth rate to 5% in 2029, it will accelerate your dividend income.
But to reach $100,000, you will have to reinvest this dividend income. Enbridge has paused its dividend reinvestment plan (DRIP). If you manually reinvest the dividend, your portfolio could reach $100,000 in 17 years. Here’s how.
| Year | Invested Amount | New Enbridge Shares @$55/share | Enbridge Share Count | Enbridge Dividend per share (3%/5% CAGR) | Enbridge Dividend |
| 2024 | $20,000 | 426 | 425.0 | $3.66 | $1,555.50 |
| 2025 | $1,556 | 28 | 453 | $3.77 | $1,708.78 |
| 2026 | $1,709 | 31 | 484 | $3.88 | $1,880.68 |
| 2027 | $1,881 | 34 | 519 | $4.00 | $2,073.86 |
| 2028 | $2,074 | 38 | 556 | $4.12 | $2,291.40 |
| 2029 | $2,291 | 42 | 598 | $4.33 | $2,586.17 |
| 2030 | $2,586 | 47 | 645 | $4.54 | $2,929.03 |
| 2030–38 | |||||
| 2039 | $9,176 | 167 | 1534 | $7.05 | $10,810.60 |
| 2040 | $10,811 | 197 | 1731 | $7.40 | $12,805.21 |
The $1,555 dividend amount can buy you 28 shares of Enbridge at a $55 average price. With 453 (425+28) accumulated shares and a 3% dividend growth rate, your passive income will increase to $1,708 next year. Just drag this calculation onto the Excel sheet to year 17. At a $55 average price, dividend reinvestments will help you accumulate 1731 Enbridge shares worth $95,202 (1731 x $55). These shares will give an annual dividend of $12,800. The total returns of 1731 shares could be $108,000.
Alternative ways to convert $20,000 into $100,000 faster
If the 17-year timeframe is too long, you could accelerate your $100,000 journey with other alternatives. You start with investing $20,000 in Enbridge and secure passive income. Instead of reinvesting it in Enbridge, you can invest the dividend income in growth stocks that generate 15 to 18% returns.
Even if a few stocks give negative returns. All you need is a high-growth stock that can make up for the losses of others and boost your portfolio. You could consider investing your first quarterly dividend of $389 in BlackBerry (TSX:BB).
The stock has bottomed out to a 20-year low as investors mixed up news of BlackBerry raising a $175 million convertible debenture with the company increasing its debt and diluting shareholdings. But BlackBerry is using the $175 million to repay its $160 million convertible debenture maturing on February 15. There is no equity dilution nor any significant increase in balance sheet debt. It is only extending the debt five years ahead.
As for its growth prospects, the company has a new CEO. He has cancelled the plan to split the Internet of Things business into a newly listed initial public offering. Moreover, the long delays in governments extending their cybersecurity contracts are finally paying off. From this point onwards, the stock could likely increase, allowing you to benefit from a 50 to 60% recovery rally in the short term.
