Tag Archives: TSX:BIP.UN

Wealth Creation: How to Double Your Money Faster

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The beginnings of wealth creation all start from savings. Someone can become wealthy from starting their business or investing in stocks. Both require planning, hard work, and savings — particularly in the initial stage.

Some businesses can jumpstart with a loan based on a solid, viable business plan. You don’t need as much money investing in stocks. Moreover, dividend stocks allow you to start earning a return right away. Initially, regular monthly savings will carry much of the weight of growing your wealth. 

How long does it take to double your money?

Doubling your money only from saving is slow. Let’s say you’re able to save $500 a month. You’ll double your money in a month. But to double it again, it’ll take two months.

Double your money faster by earning interests. Let’s say you’re super conservative and decide to park a savings of $5,000 in a GIC/CD for five years. That’ll earn you an interest rate of about 2.2%. 

According to the rule of 72 (calculated by 72 / rate of return), it’ll take more than 32 years to double your money to $10,000 if you keep earning a 2.2% interest rate on your savings. This is better than just saving your money, but only a little better. It’ll probably maintain your purchasing power in the long run from keeping up with the long-term rate of inflation.

Double your money fastest in stocks. Stock investing is one of the fastest ways to grow one’s wealth. According to the long-term average market return of 7%, you can double your money in a little over 10 years, approximated by 72/7% = 10.3 years. 

You could do even better by selectively buying quality stocks at attractive valuations. Conservative stock investors who know their stuff should be able to get long-term returns of 10% or higher, which would imply doubling one’s money in about 7 years, approximated by 72/10% = 7.2 years.

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Do Utilities Make Good Buy-and-Hold Dividend Stocks?

Utilities are a key component of solid dividend portfolios. Here are 3 utilities that provide current yields of about 3.5-4.4%. They’re fairly valued. Going through these examples will lead to an answer for the question in the title.

electric distribution

Brookfield Infrastructure

Brookfield Infrastructure Partners L.P. (TSX:BIP.UN)(NYSE:BIP) split-adjusted funds from operations per unit (“FFOPU”) increased by 2% in 2020 during the pandemic, proving itself to be a defensive business in the face of adversity.

In the first half of the year (“H1”), BIP rebounded to growth with its split-adjusted FFOPU rising almost 19% to US$1.77. Contributing factors include an economic rebound, management taking advantage of market volatility during the 2020 pandemic market crash (such as by scooping up shares of Inter Pipeline (TSX:IPL) at basement prices), capital recycling, etc. Its H1 2021 payout ratio was 58% of FFO, which is a healthy payout ratio.

BIP remains one of our favourite utilities for income. We trust that management can live up to its word by increasing its cash distribution by 5-9% per year going forward. 

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1 Must-Have Dividend Stock for Your Income Portfolio

The heat wave that hit certain parts of North America like British Columbia, Seattle, Portland, and New York highlights how essential utilities are. 

Apparently, when utility infrastructures are built, extreme weather is not accounted for, which is why cities like New York warned citizens to conserve power. They asked citizens to avoid using major appliances and limit electricity usage to reduce the risk of a wide-area power outage. 

Hundreds of lives have been lost because of this heat wave. The demographics that are most at risk include seniors, children, and pregnant women. 

In any case, if you’re affected by the heat wave, make sure to stay hydrated and cool. Consider going to the mall to enjoy air conditioning in the hottest hours and stay under the shade when you’re outside.

Utilities are essential no matter if the economy is doing well or badly. People need to use electricity, gas, and water no matter what. So, utilities are one must-have dividend stock in your income portfolio. Specifically, you want utilities that are large enough to make stable earnings year in year out and pay sustainable dividends. 

electric distribution

Here are some of the dividend-paying utility stocks that I own in my income portfolio: Algonquin Power & Utilities Corp. (TSX:AQN)(NYSE:AQN), Fortis (TSX:FTS)(NYSE:FTS), and Brookfield Infrastructure Partners L.P. (TSX:BIP.UN)(NYSE:BIP).

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