Do you have $3,000? These supercharged stocks can triple your money in a decade
Investors don’t always have to swing for the closes to beat the market. While every investor wants to believe they can triple their money, it rarely happens overnight. But getting that 200% return over a 10-year period is not an unreasonable goal. These are above-market results that translate into an annualized return of 11.6%.
Beating the historic return of the general stock market is a way to reach retirement and beyond with plenty of financial cushion. And investors can limit risk by betting on names they know that have shown those returns are achievable. All three of these stocks have done it, and the companies behind them seem poised to pursue these market-beating results.
Home deposit ( HIGH DEFINITION -3.34% ), Wholesale Costco ( COST -1.04% )and Target (TGT -1.35% ) all have benefited from increases in activity during the pandemic. But they were all extremely successful businesses – and investments – before this tailwind. As well-known (some would say boring) retailers, these companies are unlikely to stand out to investors looking to increase their returns. But investment results over the past decade have been nothing short of exceptional. This includes relative to the general stock market represented by the S&P 500 Index.
All of these companies have grown their businesses over the years by evolving to maximize their potential. Home Depot launched a new strategy in 2017 which it named One Home Depot. The multi-year, $11 billion program aimed to expand its digital channels as shoppers increasingly embrace online shopping. Separately, it acquired HD Supply to improve its offerings and appeal to the professional contractor base. This $8 billion acquisition at the end of 2020 brought the two companies together after Home Depot previously sold it for $8.5 billion in 2007.
Costco and Target had also ramped up their online business even before the pandemic. Costco’s e-commerce sales grew more than 23% in 2019. Consumer habits changed during the pandemic, and that growth skyrocketed in 2020 when its online sales jumped another 50%. Even against these strong comparisons, this e-commerce business continues to grow at double-digit rates.
Target also saw these trends coming and was heading down a similar path. It acquired Shipt, a same-day delivery service platform, in 2017. Online sales using those services nearly doubled for the retailer in 2019. It also saw strong tailwinds from consumers using digital channels during the pandemic. Digital comparable sales in 2020 soared 145% above 2019 results. Like Costco, Target’s growth continued, with its digital comparable sales in Q3 2021 still rising 29% from high levels in previous years.
Share the wealth
All three companies also pay dividends to shareholders. Target has increased its payout every year for 50 consecutive years, placing it in the elite group of Dividend Kings. Costco chooses to offer a fairly low base dividend while paying special dividends to shareholders in years when the company thrives. Most recently, this included a special dividend of $10 per share in November 2020, making it the fourth special dividend paid in the past nine years. Its base dividend was also increased in 2021 and yields just over 0.5% on an annual basis over the recent share price.
Home Depot has also been steadily increasing its payout, which currently yields around 2%. These dividends have contributed to the overall performance of these stocks and will continue to do so. For those who would like to split $3,000 into three investments that could reasonably triple over the next decade, these three household names do the trick.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end consulting service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.