Building a $1 million retirement nest egg is doable for most people. It all boils down to a combination of time, return, and contribution. The more you have of each person, the more likely you are to become a retired millionaire. For example, investing $300 a month into something that returns 10% per year (roughly the average return of the stock market over the past 50 years) will grow to $1 million in 34 years. Increasing your contributions or returns can make you a millionaire faster.
Many companies have a good track record of delivering above average total yield. NextEra Energy (NYSE: NEE) and Brookfield Infrastructure (NYSE: BIP)(NYSE: BIPC) stand out for the ability to send a strong return, which very visible possibility for along. That makes it a great stock to buy and hold as you strive to build a $1 million retirement nest egg.
A powerful driver of growth
NextEra Energy is utility with an outstanding track record of adding value to investors. Over the last decade, the company has grown earnings per share at a compound annual rate of 10%. That has helped 11% compounded annual growth in dividends. That both catalysts have given fuel to deliver 15% average total annual return over the past 10 year.
Electric companies focused on clean energy are well positioned to continue generating strong profits in the coming years. In the near term, it expects to grow its adjusted earnings per share at or near the upper end of its annual target range of 6% to 8% through at least 2026. That should power dividend growth of around 10% each. year during that period. With a dividend yield approaching 3%, NextEra’s growing earnings should be able to generate double-digit total returns.
Meanwhile, the long-term outlook is bright. The demand for renewable energy is on track to grow with a compound annual rate of 13% until 2030. Chances are it will continue to grow rapidly in the coming decades as the economy steadily decarbonizes. This should give NextEra Energy, one of the largest renewable energy developers, the power to continue generating strong total returns.
Attached to some strong mega train
Brookfield Infrastructure has returned a total of 14.5% annually since its formation in 2008. The global infrastructure giant has increased its funds from operations (FFO) per share at a compound annual rate of 15% over the period. That has helped fuel 9% compound annual distribution growth.
The company expects to continue to increase FFO per share at an annual rate of more than 10% for the foreseeable future. That should support 5% to 9% annual growth in the dividend, which currently yields more than 4.5%.
Several factors contribute to Brookfield’s strong growth prospects. It has focused its portfolio on three main themes: decarbonization, digitalization, and deglobalization. This investment megatrend should provide plenty of growth opportunities. Brookfield believes that it can increase FFO per share by 6% to 9% annually as it can improve the inflation index, increase volume with the global economy, and complete high-yielding capital projects such as data centers and semiconductor manufacturing plants. Meanwhile, accretive acquisition powered by its capital recycling The strategy should help push the FFO growth rate into double digits. Add in dividend income, and Brookfield should continue to produce strong total returns.
Millionaire stock potential
NextEra Energy and Brookfield Infrastructure have delivered total strength back over the years. They need a lot of power to continue generating returns in the double digits. Because of that, it can give investors the fuel to help grow their retirement accounts to $1 million in the future.
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Matt DiLallo has positions in Brookfield Infrastructure Corporation, Brookfield Infrastructure Partners, and NextEra Energy. The Motley Fool has a position on and recommends NextEra Energy. The Motley Fool recommends Brookfield Infrastructure Partners. The Motley Fool has a disclosure policy.
Want to retire on $1 million? 2 Stocks to Buy Now and Hold for Decades this was originally published by The Motley Fool
