For many people, building a $1 million savings account for retirement is possible. Essentially, it depends on a combination of time, income, and contributions. The more of each of these you do, the more likely you are to become a millionaire in retirement. For example, investing $300 per month in an investment with a 10% annual return (roughly the average stock market return over the past 50 years) would give you $1 million in about 34 years. If you increase your contributions and earnings, you can become a millionaire even faster.
Many companies have a strong track record of delivering above-average total returns. NextEra Energy (NYSE: NEE) and Brookfield Infrastructure (NYSE: BIP)(NYSE: BIPC) stand out for their ability to generate high profits and will likely continue to do so in the future. This makes them great stocks to buy and hold if you want to have $1 million to fund your retirement.
Strong Growth Engine
NextEra Energy is a utility company with a strong track record of creating value for investors. Over the past decade, the company has grown its adjusted earnings per share at an average rate of 10% per year. This resulted in an 11% increase in the annual dividend. These two catalysts gave the company the fuel it needed to deliver average annual total returns of 15% over the past decade.
The clean energy company is well positioned to continue generating strong profits for the next few years. In the near term, we expect adjusted earnings per share to grow near the high end of our annual target range of 6% to 8% through at least 2026. This should provide an opportunity to grow the dividend by about 10% per year over this period. NextEra’s dividend yield is approaching 3%, and earnings growth should enable it to achieve double-digit total returns.
Meanwhile, the company’s long-term outlook is similarly bright. Demand for renewable energy is expected to grow 13% annually through 2030. This trend is set to continue for the next few decades as economies become increasingly carbon-neutral. This should enable NextEra Energy, a leading renewable energy developer, to continue generating strong total returns.
Linked to several powerful megatrends
Brookfield Infrastructure has delivered a total return of 14.5% annualized since its inception in 2008. The global infrastructure giant has grown its operating earnings per share (FFO) at an average annual rate of 15% over that period, which has resulted in average annual distribution growth of 9%.
The company expect FFO per share to continue to grow at more than 10% annually for the foreseeable future, which should support annual dividend growth of 5% to 9%, above the current rate of 4.5%.
Several factors are driving Brookfield’s strong growth outlook. The company is focusing its portfolio on three key themes: decarbonization, digitalization, and deglobalization. These investment megatrends should provide the company with many growth opportunities. Brookfield believes it can grow FFO per share organically by 6-9% annually as it benefits from rising inflation-linked interest rates, increases revenues from the global economy, and completes high-return capital projects such as data centers and semiconductor manufacturing facilities. At the same time, increased acquisitions under its capital recycling strategy should boost FFO growth to double digits. Add in dividend income and Brookfield should continue to generate strong total returns going forward.
Potential Millionaire Maker Stocks
NextEra Energy and Brookfield Infrastructure have delivered high total returns over the years. They should have ample potential to continue generating double-digit profits. This could give investors the impetus to grow their retirement accounts to $1 million in the future.
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