A millionaire retirement — it’s the dream, isn’t it? Actually, these days it’s seeming more and more like a necessity. Most Canadians now believe they need as much as $2 million to retire comfortably. And I don’t blame them.
Inflation and interest rates have hit Canadians hard, and it’s making it hard to both afford retirement and save for it. This is why Royal Bank of Canada (TSX:RY) might be a strong option.
RBC stock for retirement
There are many reasons to consider RBC stock as a base for your retirement investment strategy. First off, if you want the largest stock on the TSX today by market cap, then you’ll find RBC stock has held that status for quite some time. It’s provided long-term growth, and that history of steady growth is likely to continue for some time.
RBC stock provides regular dividend payouts, and this can help in two ways. First, you can use those payments to reinvest right back into your long-term retirement account. What’s more, you can use those dividend payments to help fund your lifestyle in retirement.
Furthermore, RBC stock may not be the highest growth stock out there, but it’s quite consistent. So, having a long time horizon can certainly decrease your risk, with a good chance of hitting that millionaire status. If you’re starting now, you’re getting a great deal with shares lower than all-time highs. You’re also grabbing a higher dividend.
RBC stock itself
Whether you’re looking at RBC stock right before retirement or as a long-term strategy, there are more reasons to consider the stock. The company boasts a long history of profitability with a strong balance sheet. This has allowed it to weather economic downturns and continue growing.
This was the case back during the Great Recession, when RBC stock was the only bank in Canada not to cut its dividend. Fast forward to today, RBC stock is still known for its reliable and growing divided payouts. It currently holds a yield of 4.13% as of writing.
Part of this comes from its stable and diversified revenue streams. The stock has a presence in the United States, but also in international emerging markets. Its wealth and commercial management has been quite lucrative, allowing for expansion as well. This includes its most recent HSBC acquisition, bringing in more revenue for the foreseeable future.
Putting it to work
So, if you want to create a million dollars in your portfolio, then RBC stock is certainly a strong option — especially if you were to consider compound interest coupled with a growing dividend.
In the past, RBC stock has grown its shares by 87% in the last decade. That’s a compound annual growth rate (CAGR) of 6.5% in that time. Meanwhile, the dividend has increased by 106% in the last decade for a CAGR of 7.5% during this period.
If you want to achieve millionaire status, you will need to base this on what you can afford each and every month, and stick to it. Invest in RBC stock even on a monthly basis, using your dividends each quarter to reinvest back in the stock as well. Combined, this can create a compounding effect that can lead to substantial growth over time.
While there are no guarantees, investing in RBC stock seems to be one of the safest ways to create long-term, reliable income. And to hit that millionaire status by the time you reach retirement.
