This 6.59% Dividend Stock Could Double Your Money

Here is an approach you can use with a dividend stock to double your investment capital effectively.

| More on:

Stock market investing provides you with returns through stock price appreciation combined with shareholder dividends. Dividend investing with the right TSX stocks can be one of the best ways to make the most out of your investment capital and maximize the total returns from your portfolio.

When investors think of investing in stocks that could double their money, the typical approach is to invest in high-growth stocks that offer substantial capital gains. Unfortunately, high-growth stocks entail significant capital risk, and you can incur significant losses if the risk does not pay off.

Fortunately, dividend investing with the right income-generating assets can provide you with enough returns that you can double your initial investment. Today, I will discuss a method that you can use to effectively double your money using a high-yield dividend stock, such as Enbridge (TSX:ENB)(NYSE:ENB).

Using a high-yield dividend stock to double your investment

Enbridge stock has a reputation for being an excellent investment for income-seeking investors. Enbridge is a $105.17 billion market capitalization multi-national pipeline company headquartered in Calgary. The company owns and operates an extensive pipeline network responsible for moving a significant portion of traditional energy sources used in North America, generating significant revenues due to its crucial role in the economy.

At writing, Enbridge stock is trading for $52.19 per share, and it boasts a juicy 6.59% dividend yield. A mature business with a high dividend yield like Enbridge stock could provide you with the peace of mind that you can enjoy relatively stable shareholder returns through dividend payouts from your capital invested in the stock. Enbridge stock could be an excellent stock to consider as an example of how to double your money through dividend investing.

The Rule of 72 is a formula that can give you the approximate number of years for an investment to double.

Based on Enbridge stock’s 6.59% dividend yield, the Rule of 72 comes around an estimate of 10.92 years, assuming that the stock price remains the same, but we will round it off to 11 years. The best thing about investing your money in Enbridge stock is that its share price is likely to grow at a rate faster than inflation based on the stock’s historical performance.

Under the assumption that Enbridge stock continues growing its dividends by around 3% a year, investing in the stock today could potentially double your returns in around seven to eight years.

Foolish takeaway

Populating your portfolio with high-growth stocks can double your money much faster, but it is crucial to find high-growth stocks with strong growth potential.

Choosing the right dividend stocks with juicy but safe dividend yields could be a safer way to double your money than taking on a greater degree of risk by investing in a high-growth stock. You can also speed up your wealth growth faster by reinvesting your shareholder dividends through a dividend-reinvestment plan to purchase more shares of the company.

Using the money to add more shares of the stock to your portfolio will unlock the power of compounding to accelerate your wealth growth by providing you with more shareholder dividends.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends Enbridge.

More on Dividend Stocks

Canadian Dollars bills
Dividend Stocks

3 Monthly-Paying Dividend Stocks to Boost Your Passive Income

Given their healthy cash flows and high yields, these three monthly-paying dividend stocks could boost your passive income.

Read more »

Make a choice, path to success, sign
Dividend Stocks

The TFSA Blueprint to Generate $3,695.48 in Yearly Passive Income

The blueprint to generate yearly passive income in a TFSA is to maximize the contribution limits.

Read more »

hand stacks coins
Dividend Stocks

3 Ultra-High-Yield Dividend Stocks You Can Buy and Hold for a Decade

These three high-yield dividend stocks still have some work to do, but each are in steady areas that are only…

Read more »

senior man and woman stretch their legs on yoga mats outside
Dividend Stocks

TFSA: 2 Canadian Stocks to Buy and Hold Forever

Here are 2 TFSA-worthy Canadian stocks. Which one is a good buy for your TFSA today?

Read more »

calculate and analyze stock
Dividend Stocks

This 5.5% Dividend Stock Pays Cash Every Single Month!

This REIT may offer monthly dividends, but don't forget about the potential returns in the growth industry its involved with.

Read more »

Silver coins fall into a piggy bank.
Dividend Stocks

How to Use Your TFSA to Earn up to $6,000 Per Year in Tax-Free Passive Income

A high return doesn't mean you have to make a high investment -- or a risky one -- especially with…

Read more »

path road success business
Dividend Stocks

2 High-Yield Dividend Stocks to Buy Hand Over Fist and 1 to Avoid

High yields are great and all, but only if returns come with them. And while two of these might, another…

Read more »

Man holds Canadian dollars in differing amounts
Dividend Stocks

This 7% Dividend Stock Pays Cash Every Month

A high dividend yield isn't everything. But when it pays out each month and offers this stability, it's worth considering!

Read more »