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.
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 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.