Thanks to the wonders of compound interest, it doesn't take a lot of money to grow a million-dollar nest egg. For example, investing $300 a month could grow into more than $1 million in 30 years if it can generate a 12% annual return. That's slightly better than the average stock market return over the last 50 years of nearly 11%.
Many companies have a long history of beating the market. Three companies that appear likely to continue doing so in the decades ahead are Brookfield Renewable (BEP -2.52%) (BEPC -1.57%), Crown Castle International (CCI -1.10%), and NextEra Energy (NEE -0.52%). Because of that, $100 invested in each one every month could grow into a $1 million nest egg by retirement.
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Benefiting from a powerful megatrend
Brookfield Renewable has enriched its investors over the years. Since its inception, the renewable energy producer has generated an annualized total return of 19%. The company had done that by investing billions of dollars into expanding its renewable energy portfolio. That has powered more than 10% annual growth in its cash flow per share, supporting 6% annual dividend increases over the last decade.
However, Brookfield's best days appear to lie ahead. The global economy needs to invest trillions of dollars to decarbonize the energy sector over the next 30 years. That should enable Brookfield to continue to invest in expanding its renewable energy portfolio.
The company currently has 36 gigawatts (GW) of renewable energy projects in development. That's bigger than the company's current operating portfolio of about 21 GW. Combined with rising power rates, and its growing scale, these projects should support up to 11% annual cash flow per share growth through at least 2026.
Meanwhile, Brookfield sees up to another 9% yearly boost from future acquisitions. Add that growing renewable-powered cash flow stream to the company's 3%-yielding dividend, and Brookfield appears to have the power to produce double-digit annual returns for decades to come.
Connected to the data supercycle
Crown Castle has been an exceptional value creator over the years. The infrastructure-focused real estate investment trust (REIT) has delivered a more than 13% annual total return over the two-plus decades since its initial public offering.
A major driver of those returns has been the billions of dollars the company has poured into expanding its communications infrastructure portfolio. Over the last decade alone, the REIT spent $31 billion on acquisitions and capital expenditures (capex), powering 9% annual dividend growth since 2014.
The company still sees significant investment opportunities ahead. Crown Castle noted that the telecom industry's rollout of 5G networks represents a decade-long investment cycle. Meanwhile, some see a 100-year data infrastructure upgrade investment opportunity to support the digital economy. Because of that, Crown Castle has a lot of growth ahead of it, which should drive continued strong returns.
Crown Castle expects to grow its 3.2%-yielding dividend at a 7% to 8% annual rate in the near term. That suggests the company could deliver double-digit total returns in the coming years.
Plugged into several growth catalysts
NextEra Energy has also created an enormous amount of wealth for its investors over the years. The utility has generated a roughly 700% total return over the last decade alone, crushing the 276% total return produced by the S&P 500. Powering the company's robust results has been its ability to deliver above-average earnings and dividend growth. It has increased its earnings per share at an 8.7% compound annual rate since 2005, supporting 9.6% compound annual dividend growth.
A major catalyst has been the company's leadership in renewable energy. It has grown into one of the world's largest wind and solar energy producers.
That leadership should continue since it has one of the world's biggest backlogs of wind and solar energy development projects. In addition to tried-and-true technologies like wind and solar, NextEra is a leader in emerging technologies, including battery storage and green hydrogen. Meanwhile, it's tapping into other sources of growth like water infrastructure. Because of that, NextEra should have plenty of power to continue growing its earnings and dividend in the decades ahead.
Grow rich slowly
Compound interest can do wonders for your retirement. Steadily investing a few hundred dollars each month into high-performing stocks can create an enormous amount of wealth. One of the keys to finding stocks that can deliver decades of strong returns is focusing on those benefiting from megatrends. Few are as big and enduring as renewable energy and data, making Brookfield Renewable, Crown Castle, and NextEra Energy stand out as stocks that could mint their share of millionaires in the decades ahead.
