$300 a Month in These 3 Stocks Could Make You a Millionaire by Retirement

If you ask a group of Americans how much they want to have in savings by retirement, there's a good chance that the most common answer you'll hear is $1 million. While the question of whether $1 million will be enough for you is another issue, the fact remains that a seven-figure nest egg is a popular target.

One of the most surefire ways to build your own million-dollar (or more) nest egg is to invest in a portfolio of high-quality stocks that are likely to grow over time, and to keep adding to your brokerage account no matter what the stock market as a whole is doing.

With that in mind, here are three excellent stocks that could not only help you build your nest egg over time, but that can do so without excessive volatility.

I've been buying this stock for over a decade

Realty Income (O -0.17%) was one of the first dividend stocks I ever bought, and I've been building my position in it for over a decade. If you aren't familiar, Realty Income is a real estate investment trust, or REIT, and owns a portfolio of more than 13,000 properties, most of which are occupied by top quality operators of recession-resistant businesses.

Since listing on the NYSE in 1994, Realty Income, which has a 5.5% dividend yield as of this writing, has generated 14.2% annualized returns for investors, and it has done so with half of the volatility of the S&P 500 index. To put this into perspective, a $10,000 investment when Realty Income went public 29 years ago would be worth about $461,000 today.

The best investment most Americans can make?

Warren Buffett has said that the best investment most Americans can make is a simple S&P 500 index fund like the Vanguard S&P 500 ETF (VOO 1.00%). In simple terms, this ETF aims to match the performance of the S&P 500 benchmark index over time, and with extremely low investment fees.

While the S&P 500 will certainly have good years and bad as time goes on, the index has historically produced excellent returns over long periods. Depending on the exact timeframe, the S&P 500 has delivered annualized total returns in the 9%-10% range when looking at a multi-decade period.

Lots of tailwinds and an impressive track record

Last but not least, Digital Realty Trust (DLR 0.95%) is a REIT that develops, owns, and operates data center properties all over the world. It is one of the largest real estate owners in the market and has a strong 3.9% dividend yield. Although it has its ups and downs like any stock, Digital Realty's long-term track record is impressive. Not only has it increased its dividend every year since its 2004 IPO, but it has also delivered a 2,150% total return for investors since that time, more than four times the S&P 500.

Looking ahead, there could be some major growth tailwinds. Some of the hottest tech trends, including artificial intelligence (AI), autonomous vehicles, virtual and augmented reality, and the surge in connected devices are likely to keep demand for secure places to store servers and data transmitting equipment for years to come.

Just a glimpse at the power of long-term dividend investing

So, how much could a $300 monthly investment into these stocks grow to over the long term? Well, assuming 10% annualized returns (conservative, given the historical performance of Realty Income and Digital Realty), here's how your portfolio could grow:

Data source: author's calculations. Assumes any dividends are reinvested.

Now, you'll probably want to diversify your portfolio among more than three stocks over time. But the point is that if you steadily put money into top-quality stocks and ETFs like these over long periods of time, you might be surprised at how your money could grow.