Some companies have a knack for making their investors richer. They operate highly profitable businesses, giving them ample cash to fund their growth while returning money to investors.
Brookfield Renewable (NYSE: BEPC)(NYSE: BEP) and Prologis (NYSE: PLD) are proven wealth creators. They’re in an excellent position to continue enriching their investors in the future. That makes them great stocks to buy for those seeking to grow their wealth over the next three to five years.
A powerful wealth creator
Brookfield Renewable has generated a 15.8% average annual total return over the last 20 years. That has significantly outpaced the S&P 500‘s 10.3% average annual total return. Put another way, the renewable energy producer has grown a $10,000 investment made 20 years ago into over $187,000. That’s $100,000 more than a similar investment in an S&P 500 index fund.
Brookfield’s ability to grow its earnings and dividend at healthy rates has powered those strong returns. The company has grown its funds from operations (FFO) at a 12% compound annual rate since 2016. Meanwhile, it has increased its dividend by a 6% compound annual rate since 2001.
The company is in an excellent position to continue growing shareholder value over the next several years. Brookfield Renewable expects a trio of organic growth drivers (inflation-indexed rate increases, margin enhancement activities, and development projects) to power 7% to 12% annual growth in its FFO per share through 2028. It recently enhanced its already strong long-term organic growth rate by signing a long-term power deal with tech titan Microsoft. In addition, it sees mergers and acquisitions activities adding to its annual FFO per share growth rate, driving it into the double digits.
Brookfield Renewable’s growing earnings should give it the power to continue increasing its high-yielding dividend (recently around 4.5%). The company aims to raise its payout by 5% to 9% annually over the long term.
That growing dividend will provide investors with a nice income stream and base return. Add that to its double-digit earnings growth rate, and Brookfield Renewable could produce total returns in the mid-teens over the next five years.
Lots of growth still ahead
Prologis has also done an excellent job of enriching its investors over the years. The industrial REIT has delivered a 13.6% average annual total return over the last decade. That has edged past the S&P 500’s 13% average annual total return during that period.
The REIT has grown briskly, especially over the past five years. Prologis has grown its core FFO per share at a 12% annual rate over the last five years, significantly faster than the S&P 500’s 7% earnings growth rate. It has benefited from strong rental growth, value-creating development projects, and accretive acquisitions. Meanwhile, the REIT has increased its dividend at a 13% compound annual rate during that period, more than double the 5% dividend growth rate of companies in the S&P 500.
The leading industrial REIT expects to continue growing at a strong pace over the next few years. Prologis sees organic growth drivers like rising rents, development projects, third-party investment management expansion, and energy installations driving 9% to 11% annual growth in its core FFO per share through 2026. That doesn’t include the effect of acquisitions, which have historically enhanced its per-share growth rate.
That strong growth outlook puts Prologis in a solid position to continue increasing its dividend by around a double-digit annual pace. With its payout currently yielding 3.5% (more than double the S&P 500’s 1.4% yield), Prologis can supply a solid and rapidly rising income stream and base return. Add in its earnings growth, and it could deliver total annual returns in the low to mid-teens over the next few years.
Proven wealth creators
Brookfield Renewable and Prologis have long histories of enriching their investors. They’ve grown their earnings and dividends at above-average rates, which should continue in the future. Because of that, they’re in strong positions to make their investors even richer over the next three to five years. That makes them great stocks to buy right now to build your wealth in the coming years.
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Matt DiLallo has positions in Brookfield Renewable, Brookfield Renewable Partners, and Prologis. The Motley Fool has positions in and recommends Brookfield Renewable, Microsoft, and Prologis. The Motley Fool recommends Brookfield Renewable Partners and recommends the following options: long January 2026 $395 calls on Microsoft, long January 2026 $90 calls on Prologis, and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
2 Stocks That Can Help You to Get Richer in the Next 3 to 5 Years was originally published by The Motley Fool
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