The deadline is fast approaching to make contributions to your RRSP for the 2015 tax year.
In the past investors could get decent returns from GICs or government bonds, but those days are long gone, and equities are really the only game in town.
This poses a challenge because stocks carry more risk, and the sell-off in the Canadian market over the past year has many people wondering if any stock is safe.
Here are the reasons why I think conservative investors should consider BCE Inc. (TSX:BCE)(NYSE:BCE) and Fortis Inc. (TSX:FTS) in the current environment.
BCE
BCE holds a dominant position in an industry that has few serious competitors. That might not please consumers who think their telecom prices are too high, but it is fantastic for investors.
Will BCE stay on top?
In recent years the company has added a number of media, advertising, and retail assets to complement the wireless and wireline infrastructure network. As a result, investors enjoy a revenue stream that taps every step along the Canadian media and telecom value chain.
In fact, the company is so well entrenched that there is a good chance you are putting a bit of cash in the pockets of BCE’s investors every time you listen to the weather report, watch the news, check your e-mail, download a movie, or text your friend.
Given the size of the country and the investment required to compete, I think there is little risk of a major new competitor entering the Canadian market. If one does emerge, BCE is well positioned to defend its turf.
BCE recently reported strong Q4 2015 results. The company pays a quarterly dividend of $0.68 per share that yields 4.7%.
Fortis
Fortis operates electricity generation and natural gas distribution assets in Canada, the United States, and the Caribbean.
Investors might think this is a boring company, but a close look tells a different story.
Fortis is growing very quickly. Two years ago the company spent US$4.5 billion to acquire Arizona-based UNS Energy. The deal went very well and Fortis has now set its sights on a much larger prize.
The company recently announced a US$11.3 billion deal to purchase ITC Holdings Corp., the largest independent pure-play transmission company in the United States.
The move will make Fortis one of the top 15 companies in the North American public utility sector and diversifies the company’s assets by regulatory jurisdiction as well as regional economic exposure.
Fortis pays a quarterly dividend of $0.375 per share that yields 4%. The company has raised the payout every year for more than four decades, and management plans to hike the distribution by at least 6% per year through 2020.
