Millionaire status can seem like only a dream to most people. The assumption is that to become a millionaire, you have to make at least a million dollars per year. But that’s simply not true. If you’re a millennial, there’s only one thing you need to become a millionaire: time.
If you’re in your thirties, for example, that means you have about 30 years before you’ll be aiming for retirement. That’s a ton of time to invest in a long-term, stable stock that can get you to your goal.
In addition, as an investor you should be looking for strong dividends that you can reinvest in your stock every quarter, or in the case of my example, every month. That means after your initial investment, you won’t even have to reinvest your own money, though of course I would recommend that you do.
So millennials, which stock do I recommend?
Pembina: the millennial millionaire maker
There are a number of reasons why I would choose Pembina Pipeline Corp. (TSX:PPL)(NYSE:PBA) as the top stock to invest in today. First of all, there’s the elephant in the room: the market crash. This stock offers an enormous upside for investors willing to buy and hold for that millionaire mark.
The stock trades at $24.50 as of writing, a nearly 42% discount from its fair value estimate. Beyond fair value, analysts believe this stock is going no where but up in the next two years, and has the potential to reach even $60 per share in that time.
The market crash isn’t the only upside, as Pembina has long been touted as a dividend super star. The stock dishes out monthly dividends with an insane yield of 10.66% as of writing. That yield comes out to $2.52 per share per year, or $0.21 per share per month.
All that cash adds up when you’re reinvesting every year. As well, the stock has a strong history of dividend increases, with a 40% increase in the last five years alone.
Strong and steady
It’s not only the stable dividend that should have millennial investors interested, but the company’s future. Part of the reason this stock is down in the market crash is the oil and gas crisis.
That’s twofold, as the company already dropped with the oil glut in Canada, and fell further when Saudi Arabia and Russia announced oil production would not decrease in either country.
Yet what millennial investors need to remember is that this company is the solution to the gas glut, not the problem. Canada desperately needs pipelines to send oil across North America, and Pembina is making them.
The company has $5.6 billion in remaining secured projects to extend its Peace pipeline. So millennial investors who buy up today will surely be rewarded in both the near and far future.
So how do you get to that millionaire status? Let’s say you take your Tax-Free Savings Account (TFSA) contribution room of $69,500 and put it toward Pembina. Today that would buy you about 2,860 shares, bringing in $7,207.20 of dividends per year even if nothing happened with this stock.
But you’re going to reinvest those funds. So let’s reinvest dividends and assume the stock will reach fair value in the next year and then climb steadily from there. Also, that those dividends will grow steadily as well.
That means that in 20 years, you will have surpassed millionaire status and have reached $$1,536,614.06 from that initial investment — and you didn’t even add an additional cent of your own money.
The post Market Crash: Become a Millionaire Millennial in 20 Years appeared first on The Motley Fool Canada.
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Fool contributor Amy Legate-Wolfe owns shares of PEMBINA PIPELINE CORPORATION. The Motley Fool recommends PEMBINA PIPELINE CORPORATION.
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