RRSP Wealth - Top Dividend Stocks for Self Directed Investors


Piggy bank next to a financial report

Canadian savers are taking advantage of their RRSP contribution space to build self-directed pension funds using their online brokerage accounts. One popular strategy for building retirement wealth involves buying top dividend stocks and using the distributions to acquire new shares.

TD Bank

TD (TSX:TD)(NYSE:TD) recently put to bed any speculation about how it will use the cash hoard it built up during the pandemic. Canada’s second-largest bank by market capitalization is purchasing First Horizon Corp. in a US$13.4 billion deal that will expand TD’s presence in the American retail banking sector. In fact, the addition of First Horizon will bring more than 400 branches to the portfolio and make TD one of the six largest retail banks in the United States with more than US$600 billion in assets.

TD has agreed to pay US$25 per share to acquire First Horizon, representing a 37% premium to the closing price before the announcement of the deal. First Horizon has operations in 12 U.S. states primarily located in the U.S. southeast. TD’s existing American operations run down the American east coast from Maine to Florida.

TD is also using its excess cash to buy back stock, and the board raised the dividend by 13% last fall after the pandemic ban on bank dividend hikes ended. Investors should see another generous payout increase for 2023.

TD is one of the top dividend-growth stocks in the TSX Index over the past two decades with a compound annual dividend-growth rate of better than 10%.

The stock is down from the 2022 high, giving investors a chance to buy TD on a dip. At the current price near $101.50, TD stock offers a 3.5% dividend yield.

Long-term RRSP investors have enjoyed solid returns from holding TD stock. A $10,000 investment in the bank’s shares 25 years ago would be worth more than $265,000 today with the dividends reinvested.

Canadian Natural Resources

Canadian Natural Resources (TSX:CNQ)(NYSE:CNQ) is a giant in the Canadian energy sector with a diversified portfolio of oil and natural gas assets. The company is enjoying the benefits of the rebound in oil and gas prices, and while the stock has surged from $12 in March 2020 to a recent high of $80, more upside should be on the way.

Canadian Natural Resources recently raised its quarterly dividend by 28% to $0.75 per share. That’s good for an annualized yield of 3.9% at the current share price near $76. The company is also using extra cash to buy back up to 10% of its outstanding stock over the next 12 months.

The price of WTI oil is expected to remain at or near US$100 per barrel for some time due to tight global supplies and sanctions against Russia. Natural gas demand is expected to grow in the coming years as utilities transition to natural gas from coal and oil to producer power. Canadian gas will be in high demand in international markets, and CNRL has vast natural gas resources in Western Canada that can easily head to new LNG facilities on the BC coast to ship to international buyers.

Despite the ups and downs of the oil market, CNRL has raised its dividend for 22 consecutive years with a compound annual dividend-growth rate of 22%. That’s a great track record that looks set to continue.

The bottom line on top dividend stocks for RRSP investors

TD and CNRL are leaders in their respective industries and have long histories of providing investors with above-average dividend growth. The stocks look attractive right now after their recent pullbacks and should be solid picks for a self-directed RRSP focused on dividends.

The post RRSP Wealth: 2 Top Dividend Stocks for Self-Directed Investors appeared first on The Motley Fool Canada.

Should You Invest $1,000 In Canadian Natural Resources Ltd?

Before you consider Canadian Natural Resources Ltd, we think you’ll want to hear this.

Our S&P/TSX market doubling* Stock Advisor Canada team just released their top 10 starter stocks for 2022 that we believe could supercharge any portfolio.

Want to see if Canadian Natural Resources Ltd made our list? Get started with Stock Advisor Canada today to receive all 10 of our starter stocks, a fully stocked treasure trove of industry reports, two brand-new stock recommendations every month, and much more.

See the 10 Stocks * Returns as of 1/18/22

(function() { function setButtonColorDefaults(param, property, defaultValue) { if( !param || !param.includes('#')) { var button = document.getElementsByClassName("pitch-snippet")[0].getElementsByClassName("pitch-button")[0]; button.style[property] = defaultValue; } }

setButtonColorDefaults("#5FA85D", 'background', '#5FA85D'); setButtonColorDefaults("#43A24A", 'border-color', '#43A24A'); setButtonColorDefaults("#fff", 'color', '#fff');>

More reading

5 Stocks to Create a Diversified Portfolio 5 TSX Dividend Stocks to Buy and Hold for Decades 1 Tech ETF to Buy for Growth-Seeking Investors TFSA Investors: 2 Dividend Stocks to Buy With $6,000 Gas Prices Are Rising: What Does This Mean for Investors?

The Motley Fool recommends CDN NATURAL RES. Fool contributor Andrew Walker has no position in any stock mentioned.

https://www.fool.ca/2022/03/29/rrsp-wealth-2-top-dividend-stocks-for-self-directed-investors/

Comments

Post a Comment

Popular posts from this blog

Get Rich With These High-Yield Canadian Dividend Stocks

Image
Dividend stocks are one of the smartest ways to create wealth in the long term. By investing in dividend-paying stocks, one can generate returns in two ways: dividends and capital appreciation. As top dividend-paying companies generally have well-established businesses and a growing earnings base, they generate steady capital gains in the long term. Further, the reinvestment of dividends allows investors to accumulate more shares and create wealth in the long term.  With this background, let’s zoom in on three high-yield Canadian stocks that can help you get rich over time.  Enbridge  Enbridge (TSX:ENB) is a must-have dividend stock, and there are solid reasons behind that. Besides offering a lucrative yield of 6.7% (based on its closing price of $53.14 on May 10), the company has a resilient business that consistently delivers steady growth.  Enbridge owns extensive midstream assets and transports oil and gas. In addition, Enbridge has interests in renewable energy faci...
Read more

How much dividend income can you earn?

Image
Passive income. It’s one of the most common financial goals for Canadian investors. Everybody likes making money on a stock trade, but what could be better than a stock that pays you income year in and year out? Such are the kinds of stocks that Warren Buffett and other long-term investors made their fortunes on. This raises a question: Is it possible to make a truly substantial amount of money – let’s say $1,000 per month – with just dividend stocks? Such a thing would be very helpful if it could be done. Consider that, $1,000 per month is more than what the average Canadian gets from the Canada Pension Plan (CPP). If you take the average CPP payment ($811) and add $1,000 per month in dividend income to it, you get to a sum of money that could potentially pay all of your bills. In this article, I will explore the topic of making money with dividend stocks. I will show how much money you’d need to invest to get $1,000 a month in dividend income. I will reveal a stock that...
Read more

RRSP Wealth - Two Top TSX Dividend Securities to Buy Now or Own for 25 Year

Image
The market pullback is giving Registered Retirement Savings Plan (RRSP) investors a chance to buy top Canadian dividend stocks at undervalued prices for a self-directed portfolio focused on long-term total returns. TC Energy TC Energy (TSX:TRP)(NYSE:TRP) has raised its dividend in each of the past 22 years, and investors should see the distribution continue to grow at a steady pace. The energy infrastructure giant operates natural gas pipelines, oil pipelines, and power-generation facilities in Canada, the United States, and Mexico. The $28 billion capital program is largely focused on expanding the natural gas pipeline business, which already boasts 93,000 km of infrastructure. TC Energy has assets that connect the Marcellus and Utica shale plays in the United States to the Gulf Coast, where liquified natural gas (LNG) facilities cool the gas to the point where it becomes liquid and can be shipped to international buyers. In Canada, TC Energy is building the Coastal GasLink pi...
Read more