Sometimes Canadians find themselves with a bit of extra cash to invest for retirement.
The funds could be from a bonus at work, a gift from a family member, or the sale of some extra boat gear that’s been clogging up the shed for the past decade.
Regardless of the source, one option for the money is to buy dividend stocks inside your RRSP.
TD continues to deliver solid results in a challenging market. The bank posted adjusted fiscal Q3 earnings of $2.4 billion–up 6% compared with Q3 2015.
Canadian retail net income dropped slightly due to higher insurance claims connected to the Albertan wildfires. This was offset by a 26% increase wholesale banking profits and a 14% jump in net income from the U.S. retail operations.
Some bank investors are concerned about energy exposure and the risk of a housing crash.
TD has less than 1% of its total loan book directly exposed to oil and gas companies, so there isn’t much to worry about on that front.
Regarding housing, TD finished fiscal Q3 with $252 billion in mortgages. The insured component represents 51% of the portfolio, and the remaining mortgages have a loan-to-value ratio of 58%. This means house prices would have to fall significantly before TD takes a material hit.
TD pays a quarterly dividend of $0.55 per share for a yield of 3.75%.
Long-term investors have done well with this stock, and that trend should continue.
Altagas operates natural gas and electricity assets in Canada and the United States.
The company has decided to shelve its plans for a $600 million liquefied natural gas (LNG) project in British Columbia, but there is still a lot to like about the business.
Second-quarter normalized EBITDA was $153 million–up 43% compared with the same period last year. The strong growth is primarily the result of new assets added last year.
Management has a knack for finding strategic acquisitions that complement the existing portfolio. The assets are split between the U.S. and Canada, so investors are getting balanced exposure on both sides of the border.
Altagas recently raised its monthly dividend to $0.175 per share. That’s good for a yield of 6.3%.
Is one a better bet?
Both stocks are great picks for an RRSP account.
The banks have enjoyed a big run in recent months, so I would probably make Altagas the first choice. It offers a better yield, and the stock could catch a nice tailwind once money rotates back into the energy sector.