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Warren Buffett, the most successful dividend investor of all time, credits his success to a simple but highly effective compounding strategy known as dividend reinvestment programs (DRIP). This strategy leverages the power of compounding by reinvesting dividend income into stocks, creating a snowball effect that has made the Oracle of Omaha the success he is today.
Long-term dividend investors can take advantage of the DRIP strategy to grow their stock investments into fortunes Pfizer Inc (NYSE:PFE) is one of the growth stocks with the potential to make you a millionaire in about a decade through dividend accrual.
As the table below shows, a $50,000 investment in Pfizer, with monthly additions of $500, could grow to $1,030,974.5 after taxes by 2034, assuming the stock maintains its current annual dividend growth rate of 0.03% and the expected share price growth of 0.03% is maintained. 25.58%.
|
Years |
Shares initially owned |
Starting share price |
Annual contribution |
End-of-year dividend after taxes |
Final balance after taxes |
|
1 |
1751.00 |
$28.56 |
$6,000.00 |
$2,623.64 |
$71,633.63 |
|
2 |
1990.64 |
$35.99 |
$6,000.00 |
$3,759.34 |
$100,017.58 |
|
3 |
2205.88 |
$45.34 |
$6,000.00 |
$5,250.50 |
$137,272.50 |
|
4 |
2402.81 |
$57.13 |
$6,000.00 |
$7,208.39 |
$186,171.57 |
|
5 |
2586.29 |
$71.98 |
$6,000.00 |
$9,779.10 |
$250,355.06 |
|
6 |
2760.26 |
$90.70 |
$6,000.00 |
$13,154.43 |
$334,601.56 |
|
7 |
2927.87 |
$114.28 |
$6,000.00 |
$17,586.28 |
$445,183.93 |
|
8 |
3091.67 |
$144.00 |
$6,000.00 |
$23,405.38 |
$590,336.76 |
|
9 |
3253.74 |
$181.44 |
$6,000.00 |
$31,046.05 |
$780,869.91 |
|
10 |
3415.79 |
$228.61 |
$6,000.00 |
$41,078.59 |
$1,030,974.08 |
Despite Pfizer’s shares falling to their lowest level since 2013 due to declining demand for COVID-19 vaccines, the company’s future looks bright if it continues to roll out new products funded by the profits generated earned through the windfall from vaccine sales. In February 2024, Pfizer announced its plan to have at least eight blockbuster cancer drugs by 2030, following the acquisition of Seagen Inc, a biotech company specializing in the research, development and commercialization of cancer therapies.
Institutional investors are already showing strong interest in Pfizer: Two Sigma acquiring 18.9 million shares, Point72 Asset Management acquiring 1 million shares and Susquehanna acquiring 1.5 million shares in the first quarter of 2024. Pfizer currently offers an annual dividend yield of 5. 75%, with a five-year dividend growth rate of 3.70%.
Build wealth with these high-yield alternatives
While investing in dividend stocks like Pfizer can be a powerful way to build wealth over the long term, smart investors should also consider alternative investments that offer high returns and diversification. Two such options are the Ascent Income Fund and the Arrivald Private Credit Fund.
The Ascent income fund targets stable income from senior commercial real estate debt positions and offers a historic distribution yield of 12.1%, backed by real assets. With payment priority and flexible liquidity options, the Ascent Income Fund is an important investment vehicle for income-oriented investors. New investors with EquityMultiple can now invest in the Ascent Income Fund with a reduced minimum of just $5,000. Click here to learn more about the Ascent Income Fund and start generating a reliable, high-yield income stream.
The Arrived private credit fund simplifies investing in short-term financing for real estate projects, guaranteeing attractive returns through quality residential real estate. With targeted annualized dividends of 7-9%, quarterly liquidity and a diversified pool of real estate-backed loans, this fund is an excellent addition to equity investments. Click here to learn more about the Arrivald Private Credit Fund and how it can help you achieve your financial goals.
While dividend stocks like Pfizer can be an excellent way to build wealth through compounding, investors should also consider high-yield alternative investments like the Ascent Income Fund and the Arrivald Private Credit Fund to further diversify their portfolios and maximize their returns. By combining long-term dividend growth with high-yield real estate bond investments, investors can create a resilient, income-producing portfolio that can weather any market environment.
This article Invest $50,000 in This Stock to Become a Dividend Millionaire in 10 Years originally appeared on Benzinga.com
