How to Retire Early With $24K in Annual Dividends and $1.7 Million in Cash

If you can put aside cash and leave it alone, then you can turn that cash into soaring income for your early retirement.

| More on:

Early retirement can seem like a dream to many. But what does it exactly entail? Do you really just want to sit around and do absolutely nothing? Or is it more about having time for the passions in your life, like traveling?

No matter what you choose, there is certainly a way to retire early and keep cash coming in. Even if it means working now and again at something you enjoy rather than a day job, you can retire with enough in your account to retire when you want.

Start investing now

The easiest way to retire early is to start investing now — no, really; right now — but not necessarily in some high-growth stock that could potentially make millions overnight. If we could all find those stocks, we’d all be millionaires.

That’s why, instead, it’s far better and easier to get in the market with simple, stable stocks. These might include financial institutions, energy stocks, and real estate stocks.

So, why not consider one of all three? I like Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM), Brookfield Infrastructure Partners (TSX:BIP.UN)(NYSE:BIP), and Northland Power (TSX:NPI).

Why these stocks?

Each of these stocks has a long history of strong growth, and a stellar future as well as a bank stock. CIBC stock is a great deal after its stock split. It’s now trading at 9.29 times earnings with a dividend yield at 5.41%. Shares have grown 613% in the last two decades for a compound annual growth rate (CAGR) of 10.31%. Its dividend has grown by a CAGR of 7.24% in that time.

Brookfield is backed by Brookfield Asset Management, a firm that’s been around for well over a century and invests in multiple areas of real estate. One area is infrastructure, which includes any type of necessary property like energy and water. It offers a 3.34% dividend yield, with shares up 1,476% in the last 13 years for a CAGR of 23%. Its dividend in that time has risen by a CAGR of 9.44% during that time.

Finally, Northland Power is growing its presence within the clean energy sector, and it offers monthly income while you wait for more growth. It’s signing up for even more agreements across Europe, and that should only grow stronger with the shift to clean energy. It offers a dividend yield at 2.69%, with share growth of 1,420% in the last two decades for a CAGR of 14.56%. Its dividend has grown at a CAGR of 1.06% in the last decade.

Make some retirement money

If you were to put $10,000 into each of these stocks and simply reinvest your dividends, here is what you would get. CIBC stock could provide you with $520,578 in the next 30 years, Brookfield could provide you with $433,180 (though this number is with far more conservative return growth), and Northland could provide you with $715,650. That’s a total of $1,669,408 in your portfolio!

What’s more, you can look forward to annual passive income through dividends as well — a total of $24,267 each and every year! That’s some solid income that could see anyone through retirement and beyond.

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 Amy Legate-Wolfe has positions in CANADIAN IMPERIAL BANK OF COMMERCE. The Motley Fool recommends Brookfield Asset Management Inc. CL.A LV and Brookfield Infra Partners LP Units.

More on Dividend Stocks

Train cars pass over trestle bridge in the mountains
Dividend Stocks

Canadian National Railway Stock is on Sale: Why Now is the Time to Invest

CNR stock has long been a top stock, with a solid position in a railway duopoly. But right now is…

Read more »

ETF stands for Exchange Traded Fund
Dividend Stocks

This 7.9% Dividend Stock Pays Cash Every Month

We all want dividends, and having them come out monthly is ideal! But this might be a strong choice for…

Read more »

Electricity transmission towers with orange glowing wires against night sky
Dividend Stocks

Is Northland Power Stock a Buy for its 6% Dividend Yield

Northland Power stock is cheap and ready to move higher as major projects near completion. In the meantime, we have…

Read more »

space ship model takes off
Dividend Stocks

3 Top Canadian Stocks That Just Increased Their Dividends (Again)!

These three top Canadian stocks just increased their dividend. No surprise since they have a great record of growing earnings…

Read more »

Canadian flag
Dividend Stocks

This Canadian Dividend Stock Pays at 11.2%

A high dividend yield is awesome, sure, but is this dividend stock still a great buy with that 11.2% yield,…

Read more »

Hand Protecting Senior Couple
Dividend Stocks

3 Blue-Chip Stocks So Safe Canadians Can Hold Them Until They Die

Canadian National Railway (TSX:CNR) is a stock worth owning for life.

Read more »

stock research, analyze data
Dividend Stocks

14.7% Dividend Yield? Buy Up This Passive-Income Stock in Bulk!

That dividend yield is high, but it still comes with some strong reasons to consider the stock outside of a…

Read more »

Canadian Dollars bills
Dividend Stocks

1 Dividend Stock That Could Create $5,000 in Tax-Free Passive Income in 10 Years

Here's why Fortis (TSX:FTS) certainly looks like a top dividend stock with outsized total return upside worth buying right now.

Read more »