2 growth stocks that could help me retire early
Growth stocks are a relatively high-risk investment. But as an investor, if I learn how to make good decisions, they can become an excellent source of long-term wealth generation. If I plan to invest in stocks that will help me retire early, I will hunt the companies expected to perform better over the long term, either through growth, dividends or preferably both.
I have previously discussed two growth stocks that would boost my portfolio. But recently, I’ve found another two which could help me retire early.
Using REITs to help me retire early
Realty Income (NYSE:O) is a real estate investment trust committed to providing investors with a dependable dividend income. This growth stock’s strength is its diversified real estate portfolio which includes over 6,700 commercial properties. Moreover, what makes this an attractive retirement stock is that Realty Income, by law, has to pay 90% of its taxable income in the form of dividends. This means investors benefit the most from the REIT’s net income.
Realty Income has twelve dividend payouts in a year. For me, this is like a monthly salary, except I don’t actually have to do any work. This additional income stream could help me reach early retirement.
The company has an excellent record of continuously increasing its dividend. In the past ten years, this growth stock has increased its annual payout by 63%, from $1.73 to $2.81 per share as of 2020.
Despite the amazing track record of paying a dividend for 614 consecutive months, Realty Income is far from risk-free. Rising interest rates are a significant threat that could heavily disrupt this business’s income stream. Why? Because rising interest rates for a REIT means lower profit margins. After all, with most of their profits being paid out to shareholders, real estate investment trusts often heavily rely on debt financing to grow.
Nevertheless, this REIT has a solid business model designed to provide long term returns to investors. At least, that’s what I think. Therefore, it is one of my top picks to help me retire early.
Tech companies are the most sought after growth stock
Cisco Systems (NASDAQ:CSCO) develops, manufactures and sells networking hardware and software, which have been an integral part of Silicon Valley’s growth. Rapidly increasing its reach in the tech world, this growth stock has earned its name through multiple acquisitions. Recently it performed a $2.35 billion deal to acquire Duo Security. With this acquisition, the tech company was able to spread its wings in zero-trust cyber security.
Cisco has a strong track record of also paying dividends for the last ten years. From an annual dividend of $0.24 per share, this growth stock has increased its dividend by 500% to $1.44 in 2020. Moreover, the tech giant’s forecasted total revenue growth is estimated to be around an annualised average rate of 5% to 7% for the next four years. The expected increase in revenue gives investors like me great comfort for continuous dividend payments in future.
But the tech industry is highly prone to cyberattacks. Therefore, despite the positive expected growth, any breach in Cisco’s networking system could send this growth stock plummeting. It’s also worth noting that the firm has quite a substantial level of competition to fend off.
But assuming no cyber attack can penetrate its systems, and the forecast growth is accurate, I believe this growth stock will make an excellent addition to my portfolio and help me retire early.
The key to investing in growth stocks that can help me retire early is picking up companies capable of thriving over the long term. At least, that’s what I think. With regular dividend money coming in and the potential investment rising, I believe these two businesses can help boost my wealth for many years to come, despite the risks.
Top US Growth Stock for 2021
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Covid-19 has devastated the global markets. But this stock has been thriving and has doubled its revenue for the last five years, even in 2020! What's more, due to the recent volatility in the stock market, The Money Cog analysts feel the stock is grossly undervalued.
Needless to say, I believe it's a fantastic business that could become an industry leader in the future!
Saima Naveed does not own shares in any of the companies mentioned. The Money Cog has no position in any of the companies mentioned. Views expressed on the companies and assets mentioned in this article are those of the writer and therefore may differ from the opinions of analysts in The Money Cog Premium services.