It’s been a difficult year on Wall Street. Since the 126-year-old Dow Jones, widely followed S&P 500, and Nasdaq Composite hit record highs, they have dropped 19%, 24%, and 34%. The S&P 500 and Nasdaq entered a bear market for the first time since March 2020 following the latter two plunges.
Bear markets, on the other hand, have a propensity to feed on investors’ concerns. Market downturns are often brief. Furthermore, every time the major US stock indexes have fallen by at least 20% over multiple days, it has been an excellent buying opportunity for patient investors.
To put it another way, it’s not a question of whether you should buy equities right now; the issue is what stocks to invest in.
Two Dividend Aristocrats in this little group of passive-income juggernauts have the potential to make long-term investors a lot wealthier. If you give these two income titans until 2032, they’ll have the creativity and intangibles needed to turn a $300,000 investment into $1 million by then.
NextEra Energy: 2.17% yield
The largest electric utility stock in the United States by market capitalization, NextEra Energy (NEE -0.17%), is one of the first Dividend Aristocrat stocks capable of returning 233% in 2032. Over the last 26 years, NextEra has raised its base annual payout.
Utility stocks have a leg up on other types of equities since they provide extremely consistent operating cash flow. Electricity demand is fairly constant from one year to the next. NextEra can put money down for acquisitions, dividends, and new infrastructure projects without jeopardizing its profitability because electric demand does not fluctuate much from year to year.
NextEra Energy’s unique selling proposition is its renewable energy strategy. No other electric utility is producing more capacity from solar and wind power. With the firm committing to spend up to $55 billion, in aggregate, from 2020 to 2022 on new infrastructure projects, it is doubtful any other utility will surpass NextEra in terms of green energy anytime soon.
Clean-energy initiatives are not only expensive in one sense, but they have also proved to be well worth it. Aside from taking advantage of historically low lending rates when funding projects, NextEra has seen a large drop in electricity generation costs as a result of its aggressive green energy investments.
NextEra Energy’s second-quarter earnings are boosted by its regulated utility operations (those that are not fueled by renewable energy sources). NextEra won’t be exposed to the volatile wholesale electricity pricing since state public utility commissions regulate rate levels.
Walgreens Boots Alliance: 4.72% yield
A second Dividend Aristocrat that could turn a $300,000 investment into $1 million in ten years is Walgreens Boots Alliance pharmacy. For over 89 years, Walgreens has paid quarterly dividends and increased its base annual payout for the last 46.
Healthcare companies are consistently immune to stock market fluctuations and economic downturns. Individuals will always get sick and need medical devices, prescription drugs, and healthcare services, no matter how bad the economy or stock market gets. COVID-19, on the other hand, introduced a new situation for traditionally foot traffic-driven US pharmacy chains that resulted in an actual profit reduction. This short-term downturn provides an excellent opportunity for long-term investors to buy in cheap.
When the pandemic hit, the Walgreens Boots Alliance’s leadership team implemented a multipoint plan to increase organic growth, improve operating margins, and encourage repeat visits.
Walgreens reduced its annual operating expenses by more than $2 billion a year ahead of the set schedule, according to reports. It has, though, poured money into numerous digital transformation efforts. For example, increasing direct-to-consumer sales is a smart approach for Walgreens to boost organic growth and enhance customer convenience.
This development, however, is its collaboration with and investment in VillageMD. The two businesses have already established over 100 co-located, clinics that are full-service with the aim of reaching 1,000 by 2027. Whereas most pharmacies can only give vaccines, these doctor-staffed clinics are ideal for gaining repeat patients and directing them to Walgreens’ pharmacy.