Build Your Retirement Fund: Invest in These 3 Stocks for Long-Term Wealth Growth

Build Your Retirement Fund: Invest in These 3 Stocks for Long-Term Wealth Growth

A million dollars is a lot of money, but if you have decades until retirement, it’s within reach of most investors. The key is to find an investment approach and stick to it, regardless of good or bad markets.

Three currently out of favor stocks (two that pay dividends and one that doesn’t) to consider buying and holding that will help you reach that million dollar investment goal are Toronto-Dominion Bank (NYSE:TD)owner Real estate income (NYSE:O)And Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B). Here’s a quick overview of each.

1. Toronto-Dominion Bank: real concerns but exaggerated risk

The Toronto-Dominion Bank, or TD Bank as it is more commonly known, is one of the largest banks in Canada. Banking regulations in this country are very strict, which has allowed a small number of large banks (such as TD Bank) to be effectively protected from new competition. This harsh regulation has also created a conservative philosophy within TD Bank and its peers. So overall it’s a pretty safe bank.

That said, the real estate market in Canada is in a worrying state. First, there has been a long rise in house prices, and now the rapid rise in interest rates has investors worried that defaults will start to increase.

TD Bank has an additional concern. U.S. regulators recently forced the company to cancel an acquisition due to concerns about the company’s money laundering controls. Canada is the bank’s foundation, and its U.S. operations are expected to be its growth engine. This engine just stalled, but it’s probably only temporary.

Due to these concerns, investors have pushed the bank’s dividend yield to 5%, which is near its highest level historically. Given that the bank has been paying dividends for over 100 years and is the third largest in North America, Tier 1 capital ratiomeasure of its ability to resist adversity, the risk here seems modest.

Growth opportunities in the American market remain quite significant, even if they require more time to exploit. Wall Street’s concerns appear as a buying opportunity.

2. Real estate income isn’t exciting, but that’s the point

Realty Income’s 5.8% dividend yield is near its highest levels in the last decade. The investment-grade real estate investment trust (REIT) has increased its payouts every year for 29 consecutive years.

That said, this is a slow and steady REIT, not a fast grower. But that makes it a good core investment to lean on for faster-growing dividend payers like TD Bank and non-payers like Berkshire Hathaway.

Perhaps what’s most compelling about Realty Income is its size, given that its $45 billion market cap is about three times that of its closest leasehold REIT peer net (net leases require tenants to pay most operating costs at the property level).

Certainly, rising interest rates have been a hurdle for the company, but Realty Income benefits from advantageous access to capital markets thanks to its size and financial strength. This gives him the ability to make deals that his peers cannot. It is also large enough to be an industry consolidator, having acquired two of its net lease peers in recent years.

If you reinvest the dividends in this slow-growing, high-yielding stock, it can provide a solid (if boring) foundation for a more diversified portfolio.

3. Berkshire Hathaway is a strange beast

Speaking of giant companies, the Berkshire Hathaway conglomerate is involved in a wide range of businesses. She owns several, including a large insurance company, a railroad, and energy operations, and invests in individual stocks, like Coca-Cola And Western oil.

But it is probably best known for its CEO, Warren Buffett, whose philosophy permeates the company and all its investments.

What’s interesting here is the success it has achieved over time, focusing on using the huge amount of cash generated by its business to invest in other assets. Today, Berkshire has cash of nearly $34 billion and short-term investments of nearly $130 billion. All that free cash is waiting to be deployed into new ventures when the time comes, since Buffett and Berkshire tend to favor contrarian investments.

Berkshire’s history has been to buy low and hold as long as possible. This worked exceptionally well over the long term, although it resulted in poor performance over shorter periods. That’s why Berkshire Hathaway is the kind of stock you want to own for decades.

As for a good time to buy, it currently appears reasonably valued with price-to-earnings and price-to-sales ratios near or below their five-year averages. A fair price is a good price for a company like Berkshire Hathaway.

A balanced asset allocation

While each of these stocks is worthwhile, TD Bank, Realty Income, and Berkshire Hathaway together create an interesting mix: one stock for income and growth, another for income alone, and a third for just growth that creates a diversified and balanced portfolio. The key, however, is to buy and hold for a very long time, to allow the businesses you own to continue to grow. This is what will make up your seven-figure nest egg.

Should you invest $1,000 in Berkshire Hathaway right now?

Before buying Berkshire Hathaway stock, consider this:

THE Motley Fool Stock Advisor The analyst team has just identified what they think is the 10 best stocks for investors to buy now…and Berkshire Hathaway wasn’t one of them. The 10 selected stocks could produce monster returns in the years to come.

Equity Advisor provides investors with an easy-to-follow plan for success, including portfolio building advice, regular analyst updates, and two new stock picks each month. THE Equity Advisor The service has more than tripled the performance of the S&P 500 since 2002*.

See the 10 values

*Stock Advisor returns April 8, 2024

Ruben Gregg Brewer holds positions in Realty Income and the Toronto-Dominion Bank. The Motley Fool ranks and recommends Berkshire Hathaway and Realty Income. The Motley Fool recommends Occidental Petroleum. The Mad Motley has a disclosure policy.

Want $1 million in retirement? 3 stocks to buy now and hold for decades. was originally published by The Motley Fool

Source Reference

Latest stories