Should You Put BCE Inc. or Fortis Inc. in Your RRSP?

BCE Inc. (TSX:BCE)(NYSE:BCE) and Fortis Inc. (TSX:FTS) are popular dividend picks. Is one a better bet right now?

| More on:
The Motley Fool

Canadians are under pressure to save money for retirement.

In the past, this wasn’t as much of a concern because most people had full-time jobs that offered decent pension plans. When combined with the CPP and OAS payments, retirees could get by without having to rely on other savings.

Those days are fading fast, and most people are just happy to have a full-time job, let alone one with pension benefits.

As a result, building your own nest egg has become an important part of retirement planning, and owning top dividend-growth stocks in a self-directed RRSP account is one way to meet the goals.

Let’s take a look at BCE Inc. (TSX:BCE)(NYSE:BCE) and Fortis Inc. (TSX:FTS) to see if one is a better RRSP pick.

BCE

BCE has transitioned from a telephone company to a media and communications giant.

The move into the media space was initially met with some concern, but a rapidly changing communications landscape suggests the strategy is well timed as consumers demand high-speed access to their favourite content across multiple platforms, 24/7.

To ensure it stays competitive, BCE continues to invest heavily in its world-class wireless and wireline network infrastructure. At the same time, the company has moved all the way down the media value chain, making it so well entrenched in the market, it is difficult to see how any challenger could knock it off its throne.

BCE owns sports teams, a TV network, radio stations, specialty channels, and retail locations. When combined with the national infrastructure, you can see how dominant the company has become.

In fact, most Canadians probably interact with a BCE product or service on a weekly, if not daily, basis.

BCE has a long history of dividend growth, and the stock is a great holding when markets go bump in the night. The company currently pays a quarterly distribution of $0.6825 per share that yields 4.7%.

Fortis

Fortis is a gas and electricity utility with assets located in Canada, the U.S., and the Caribbean.

The company has grown steadily over the years through a mix of acquisitions and organic development, and that trend should continue.

Last year’s earnings results came in at a record $2.11 per share, a 20% increase over 2014. New revenue generated by the company’s Waneta hydroelectric expansion in British Columbia as well as the first full year of earnings from the US$4.5 billion purchase of Arizona-based UNS Energy drove the strong results.

Fortis recently announced a deal to buy ITC holdings Corp., a pure-play transmission company in the United States. The US$11.3 billion deal is a big move, but Fortis has a strong history of successfully integrating new assets.

The company gets most of its revenue from regulated facilities, which means cash flow should be predictable and reliable. This is great for dividend investors, and Fortis has one of the best distribution track records in the country. In fact, the company has raised the payout every year for more than four decades.

Fortis currently pays a quarterly dividend of $0.375 per share for a yield of 3.9%.

Which should you buy?

Both stocks are great long-term holdings and deserve to be in any RRSP portfolio. Right now, I would lean to BCE for the bigger yield if there’s only cash to buy one.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning 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 richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

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

More on Dividend Stocks

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

Engineers walk through a facility.
Dividend Stocks

1 TSX Stock I Wouldn’t Touch With a 10-Foot Pole

AtkinsRéalis (TSX:ATRL) is one TSX stock I'd never invest in.

Read more »

edit Woman in skates works on laptop
Dividend Stocks

3 No-Brainer Stocks to Buy Under $30

These three stocks all offer a huge deal for investors looking for dividends, as well as growth that will last.

Read more »

You Should Know This
Dividend Stocks

How to Convert a $300 Monthly Investment Into $338 in Monthly Income

If you want a certain amount in monthly passive income, invest a similar amount today and leave the rest to…

Read more »

Increasing yield
Dividend Stocks

3 Income Stocks With Big Yields to Consider in April 2024

If you haven’t yet made your March investments, here are three income stocks to buy the dip and lock in…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

RRSP Investors: Don’t Miss Out on This Contribution Hack!

This hack has so many benefits for you -- not just when you put it in your RRSP but for…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Passive Income: 2 Safe Dividend Stocks to Own for the Next 10 Years

Dividend stocks such as Manulife and Fortis can help you generate a stable and recurring passive-income stream.

Read more »

Young woman sat at laptop by a window
Dividend Stocks

3 Dividend Stocks Everyone Should Own for the Long Haul

For investors looking for top-tier dividend stocks to buy and hold for the long term, here are three of my…

Read more »