Building a $1 million retirement portfolio is probably easier than you think. For example, putting $300 a month into an investment earning 10% annually (about the average return of the S&P 500 over the last 30 years) would grow to $1 million in about 34 years. Increasing your investment or returns could make you a millionaire even faster.
Enbridge (ENB 0.33%) and Brookfield Renewable (BEPC +0.00%)(BEP +2.00%) have demonstrated their abilities to deliver above-average returns over the years. That should continue in the future, making them great stocks to buy and hold if you're seeking to build a $1 million retirement portfolio.
Lots of fuel to continue increasing its big-time dividend
NYSE: ENB
Key Data Points
Enbridge has delivered an average total shareholder return of 11.2% annually over the last 20 years. That has outperformed the S&P 500 (9.7% average annual total return) and its peers in the utilities and midstream sectors (8% and 7.7%, respectively).
The Canadian pipeline and utility company has delivered those strong returns by steadily expanding its portfolio of cash-generating energy infrastructure assets. That's given it the funds to routinely increase its high-yielding dividend (Enbridge delivered its 29th consecutive year of dividend growth in 2024).
The company should have the fuel to continue generating strong total returns in the future. Enbridge currently pays a 7.6%-yielding dividend, which provides investors with a strong base return.
The company backs that payout with very stable cash flow (98% comes from long-term contracts or government-regulated rate structures) and a conservative payout ratio (60% to 70% of its stable cash flow). It also has a strong investment-grade balance sheet, and its leverage ratio is within its 4.5x-5x target range.
Enbridge has the financial flexibility to invest billions of dollars annually to expand its energy infrastructure platform. It has a multibillion-dollar backlog of secured capital projects, including new natural gas pipelines, utility expansions, and renewable energy projects. That backlog gives it lots of visibility into future growth.
Enbridge expects to grow its distributable cash flow per share by at least 3% annually through 2026 and by 5% per year over the medium term. Add that to its high-yielding (and steadily rising) dividend, and Enbridge should deliver total returns of 10% to 12% annually.
Powerful growth ahead
NYSE: BEPC
Key Data Points
Brookfield Renewable is also a proven wealth creator. The global renewable energy producer has delivered a 10.8% average annual total return over the last 10 years. It has grown its funds from operations (FFO) at a 12% compound annual rate since 2016 while increasing its dividend at a 6% compound annual rate since 2001.
The company's powerful growth drivers could enable it to produce even stronger total returns in the future. It expects inflation-linked power sales contracts and margin-enhancement activities -- like providing ancillary services -- to grow its FFO per share by 4% to 7% annually through at least 2028.
Meanwhile, its massive slate of development projects (renewable energy and sustainable solutions) will add another 3% to 5% to its FFO per share each year. On top of that, the company sees merger and acquisition activities driving its FFO growth rate into the double digits.
Brookfield Renewable's organic growth drivers easily support its plan to grow its high-yielding dividend (currently 5.9%) by 5% to 9% annually. That payout is on a very sustainable foundation, thanks to the company's steady cash flow (90% of its FFO comes from long-term contracts) and strong investment-grade balance sheet. Add its attractive and rising dividend income to its surging earnings, and Brookfield could easily achieve its target of delivering 12% to 15% annualized total returns over the long term.
Proven wealth creators
Enbridge and Brookfield Infrastructure demonstrated their ability to produce double-digit annual total returns over an extended period. They should have the power to continue producing strong returns in the future. That makes them great stocks to buy and hold in the coming decades to help build a $1 million retirement portfolio.
