How to Turn a $30,000 TFSA or RRSP Into $750,000

Tax-Free Savings Account (TFSA) and Registered Retirement Savings Plan (RRSP) investors are looking for quality TSX dividend stocks to buy that can deliver attractive total returns for a self-directed retirement fund. A top investing strategy is to owe quality dividend growth stocks and use the dividends to buy new stocks.

power of composition

Using dividends to purchase additional shares triggers a powerful compounding process that can turn modest initial investments into sizeable retirement portfolios. The strategy requires patience, but time is the best friend of investors trying to build wealth. Market slumps provide opportunities to buy new stocks at cheaper prices, and steady dividend growth from top stocks tends to contribute to higher stock prices over the long term.

Enbridge

Enbridge (TSX:ENB)(NYSE:ENB) is a leader in the North American energy infrastructure industry with a market capitalization of US$115 billion and assets strategic to the proper functioning of the Canadian and US economies.

Enbridge ships 30% of the oil produced in Canada and the United States. Natural gas utilities provide fuel to millions of homes and businesses, and the natural gas transportation system connects producers to storage facilities, liquefied natural gas (LNG) facilities, power generators and natural gas suppliers. Enbridge also has a growing renewable energy group and is moving into ESG (environmental, social and governance) segments, including hydrogen and carbon capture centers.

Enbridge’s recent equity investments are focused on export opportunities. The company bought an oil export terminal in Texas for $3 billion last year. Enbridge recently announced plans for new natural gas pipelines to bring the fuel to LNG sites on America’s Gulf Coast.

In Canada, Enbridge is expanding its natural gas pipeline network in British Columbia and has signed an agreement to earn a 30% interest in the province’s $5.1 billion Woodfibre LNG project.

Europe is keen to secure large and long-term supplies of LNG from US terminals. Asia is the target market for new LNG plants being built on Canada’s west coast. Canada has significant natural gas resources that can be produced cheaply.

Enbridge has increased its dividend for each of the last 27 years. The current $13 billion capital program will drive revenue and cash flow growth over the next few years to support continued payout growth. As of this writing, the stock offers a solid 6% dividend yield.

Long-term investors would do well to hold onto Enbridge stock. A $30,000 investment in Enbridge stock 25 years ago would be worth about $750,000 today if the dividends were reinvested.

The bottom line is that you should buy top stocks for total returns

Enbridge is a good example of a stock to buy for dividend growth and total returns. TFSA and RRSP investors can currently purchase a number of quality TSX dividend stocks at competitive prices for a self-directed retirement portfolio.

Past performance is no guarantee of future returns, but companies that increase their dividends each year tend to see their stock prices rise over time, and have a strategy of buying top-paying stocks and reinvesting the dividends proven to build up pension assets.