Advice on retiring a millionaire reminds me of the old Steve Martin joke about how to be a millionaire: “First, get a million dollars.”
A more practical option, and one that has been proven effective, is to put your money to work in the stock market. Because the S&P 500 has averaged 11% returns annually for decades (including dividends), you can double your money almost every seven years by just buying an index fund.
At that rate, a person putting $1,000 a month to work in the market buying solid, growing businesses can become a millionaire in just 21 years. If you don’t have that much, $500 a month extends the time needed to only 27 years.
This is not an unattainable goal, especially because you can buy growth stocks that do much better than the market index. Investing now in the three stocks below can make you a millionaire retiree.
When the COVID-19 pandemic broke out, it was BioNTech‘s (NASDAQ:BNTX) messenger-RNA (mRNA)-based vaccine candidate, BNT162, that Pfizer (NYSE:PFE) turned to in developing what has since gone on to become one of the most widely used COVID vaccines in the world — it’s currently being used in 111 countries.
Although medical opinions can evolve on the most effective way to combat the coronavirus, it’s quite possible that the global spread of virus variants will make additional vaccine booster shots necessary.
While COVID vaccines and booster shots are obviously a near-term growth trigger for BioNTech, the pandemic accelerated the overall science of vaccine development in a way that will endure. Its mRNA technology is seen as revolutionary to scientific research because it can create vaccines and treatments more quickly and at lower cost than traditional methods.
That’s a pathway for future growth that will lead to more breakthroughs, and BioNTech will continue to be one of the biotech leaders in the space.
2. Innovative Industrial Properties
The marijuana industry represents a massive growth opportunity on its own, with multiple ways to play the space, but one of the best may be Innovative Industrial Properties (NYSE:IIPR), a real estate investment trust that acquires indoor cultivation sites for medical marijuana operators and then enters into long-term leases for them.
In May, Innovative Industrial said in its fiscal first-quarter results that it owned 69 properties for lease representing 6.2 million square feet of rentable space. Since then, the company has grown that footprint to 72 properties representing 6.6 million square feet. As of July 6, all of those properties were 100% leased to state-licensed cannabis operators .
The average length of a lease is 16.7 years, and because it passes along to the tenants annual rent escalations while also collecting property management fees, Innovative Industrial Properties has growth built into its business model.
Moreover, because it is a REIT, it’s also required to pass along at least 90% of its profits to shareholders in the form of a dividend, which currently totals $5.60 per share and yields 2.5% annually.
With regulated marijuana sales in the U.S. forecast to reach $46 billion by 2025, and producers needing facilities to grow cannabis to match that demand, Innovative Industrial Properties looks primed to offer generous returns to investors for some time to come.
3. NextEra Energy
Compared with biotechs and marijuana companies, regulated electric utility stocks may seem boring, but investors should be intrigued by NextEra Energy (NYSE:NEE) nonetheless.
It’s the largest U.S. utility by market cap, and because of the regulated nature of its business, it’s virtually guaranteed an ever-rising revenue stream because of the built-in demand for its product. Yet NextEra is still looking to the future, investing in green energy solutions to the tune of $50 billion to $55 billion between 2020 and 2022.
While the production of electricity using renewable energy has exploded in popularity over the last two decades as processes have grown less expensive, investment success has been hit or miss, and seemingly mostly miss.
The combination of steady (albeit low) growth in NextEra’s traditional, regulated utility market, plus the addition of higher-growth renewable energy projects, creates a unique opportunity in what has largely been a sleepy business relegated to the portfolios of “widows and orphans.” Although it’s been a few years since electric utility investments of any stripe were so staid, they still exude an aura of stodgy potential, and NextEra Energy is the top of the class leading the industry into the future.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. 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.