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2 Top Picks for Your TFSA

Holding dividend and distribution–paying stocks in your TFSA and reinvesting the payouts is a great way to build a tidy nest egg for the golden years.

Here are reasons why I think RioCan Real Estate Investment Trust (TSX:REI.UN), and Fortis Inc. (TSX:FTS) are solid picks right now.


Canada’s largest real estate investment trust owns 293 retail properties in Canada with some of the industry’s largest and most reliable tenants. The company also owns another 47 properties in the U.S.

RioCan just reported solid Q2 2015 results, delivering funds from operations of $136 million, a 7% gain over the same period a year earlier.

The company’s stock has been under some pressure over the past three months as investors evaluate the risks of a weakening Canadian economy and the effects of Target’s exit from the market.

The company continues to see strong demand for its prime retail locations in Canada. The company renewed 1.1 million square feet of retail space during Q2 2015 at an average rent increase of 9.8%.

South of the border, RioCan is considering selling its properties. Most of the investments were made after the financial crisis when prices were low and the Canadian dollar was very strong.

Management is undertaking a “strategic review” of the U.S. operations, and investors could see a nice cash windfall if the company sells the portfolio to lock in some gains.

RioCan pays a distribution of $1.41 per share that yields about 5.3%. The company has a distribution reinvestment plan that gives shareholders a 3.1% bonus in units on top of the units they purchase instead of taking the distributions in cash.

The recent pullback should be seen as a good opportunity to start a position in the stock.

Fortis Inc.

As the Canadian economy works its way through a rough patch, investors are looking for defensive names with strong track records of dividend growth.

Fortis offers just that.

The company owns and operates electricity generation and natural gas distribution assets in Canada, the U.S., and the Caribbean.

Fortis gets 93% of its revenue from regulated assets. This is appealing for dividend investors because it provides reliable and predictable cash flow.

The company just reported adjusted Q2 2015 earnings of $0.44 per share, a 47% increase over the same period in 2014. Strong contributions came from the Arizona-based UNS Energy assets acquired last year as well as the recently completed expansion of the company’s hydroelectric facility in British Columbia.

Fortis pays a dividend of $1.36 per share that yields about 3.6%. The company has increased the payout every year for more than four decades. Investors can enroll in the dividend reinvestment plan and get a 2% discount on new shares.

This is one of those companies you can simply buy and forget about for decades.

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Fool contributor Andrew Walker has no position in any stocks mentioned.

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