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Warren Buffett, the most successful dividend investor of all time, owes his success to a simple yet highly effective compounding strategy known as dividend reinvestment programs (DRIP). This strategy leverages the power of compounding by reinvesting dividend earnings into stock, creating a snowballing 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, and Pfizer Inc (NYSE:PFE) is among the growth stocks with the potential to make you a millionaire in about ten years through dividend compounding.
As the table below shows, an investment of $50,000 in Pfizer, with monthly top-ups 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 projected stock price growth rate of 25.58%.
Years | Shares Owned Initially | Starting Stock Price | Annual Contribution | Year End 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 shares dropping to their lowest level since 2013 due to the decline in demand for COVID-19 vaccines, the company’s future looks bright as it continues to roll out new products funded by the profits earned through the vaccine sale windfall. In February 2024, Pfizer announced its plan to have at least eight blockbuster cancer drugs by 2030, following its acquisition of Seagen Inc, a biotech company specializing in research, development, and commercialization of cancer therapies.
Institutional investors are already showing strong interest in Pfizer, with 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 5-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, savvy investors should also consider alternative investments that offer high yields and diversification. Two such options are the Ascent Income Fund and the Arrived Private Credit Fund.
The Ascent Income Fund targets stable income from senior commercial real estate debt positions, offering a historical distribution yield of 12.1% backed by real assets. With payment priority and flexible liquidity options, the Ascent Income Fund is a cornerstone investment vehicle for income-focused investors. First-time 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, providing attractive yields secured by quality residential real estate. With target annualized dividends of 7-9%, quarterly liquidity, and a diversified pool of real estate-backed loans, this fund is an excellent complement to equity investing. Click here to learn more about the Arrived 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 Arrived Private Credit Fund to further diversify their portfolios and maximize their returns. By combining long-term dividend growth with high-yield real estate debt investments, investors can create a resilient, income-generating portfolio that can weather any market condition.
This article Invest $50k In This Stock To Become A Dividend Millionaire In 10 Years originally appeared on Benzinga.com
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