It’s the dream, isn’t it — not just retiring at a great age, but retiring early? It would be nice to have time ahead of you while being financially supported enough to enjoy each and every year!
There are certainly ways to achieve financial independence and retire early. So, let’s look at exactly how to do that and two Canadian stocks that could get you there.
FIRE stocks
First, what exactly are FIRE stocks? The acronym stands for Financial Independence, Retire Early. When it comes to stocks, these are companies favoured by investors pursuing early retirement. To do so, you’ll need to build significant savings and passive-income streams.
The concept then revolves around saving and investing aggressively, often with the goal of accumulating a nest egg to sustain one’s lifestyle throughout a person’s life rather than depending on employment income. FIRE then typically aims to accumulate assets equal to 25 to 30 times their annual expenses based on the 4% rule.
This rule suggests that one could safely withdraw about 4% of their portfolio value each year, adjusted for inflation, without seeing a depletion of the principal over a 30-year retirement period. When it comes to investing then, it will mean investing in high-growth stocks, dividend stocks, stable blue-chip stocks, as well as index funds and real estate investment trusts (REITs). Today, let’s look at two Canadian stocks that tick these boxes.
A blue-chip dividend REIT
A strong option to consider in this case would be Choice Properties REIT (TSX:CHP.UN). This is one of the largest REITs in Canada and is also the REIT that holds Loblaw Companies, one of the largest food and pharmacy retailers.
The REIT holds a diverse portfolio of retail and commercial properties, including mixed-use developments. This allows it to make the most of properties in some of the most densely populated urban areas in Canada. That includes holding residential properties above Loblaw stores as well. The REIT has growth through strategic acquisitions, developments, as well as redevelopments, offering value through long-term growth.
The REIT has also demonstrated solid financial performance with a stable occupancy rate and rental payments. It currently offers a 5.52% dividend yield and a strong compound annual growth rate (CAGR). Currently, its CAGR is at 3% over the last decade. This is also during a period of volatility, offering the potential for far more growth in the future.
A high-growth, stable stock
Now I would actually recommend two companies here, though they equal the same thing. Really, it depends on how much you can afford to put away right away. I would recommend Constellation Software (TSX:CSU), as it’s become a proven blue-chip tech stock that’s expanded its operations through acquisitions into niche, essential software purchases.
However, it’s pricey. Its spinoff Topicus (TSXV:TOI), however? It’s not. It’s quite new, with the exact same mode of growth, though operating in Europe. The company has surged in share price and looks as though it will offer the exact same growth in the future as Constellation stock. Shares are up 31% in the last year alone!
So, if you’re looking for a high-growth stock just getting started, with stable growth all but assured, certainly consider Topicus stock as well. If you do, these two companies could offer the easiest way to FIRE.
