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RRSP Investors: 2 Dividend-Growth Stocks to Own for 20 Years

Canadians are searching for top dividend picks to put in their RRSP portfolios.

Let’s take look at Royal Bank of Canada (TSX:RY)(NYSE:RY) and Canadian National Railway Company (TSX:CNR)(NYSE:CNI) to see why they might be attractive.

Royal Bank

Royal Bank earned more than $10 billion in profits in fiscal 2016.

That might not make people who complain about rising bank fees very happy, but investors are all smiles.

The Canadian personal and commercial banking operations certainly contribute a sizeable chunk of the earnings, but Royal Bank also has strong wealth management, capital markets, and insurance divisions that balance out the revenue stream.

Going forward, investors should see rising contributions coming out of the United States.


Royal Bank purchased California-based private and commercial bank City National for US$5 billion in late 2015. The business is already making solid contributions, and investors could see Royal Bank expand its presence in the segment in the coming years.

Royal Bank has a strong track record of dividend growth, and long-term shareholders have enjoyed some nice gains.

How nice?

A $10,000 investment in Royal Bank 20 years ago would be worth $171,000 today with the dividends reinvested.


CN is one of those companies that just keeps chugging along at a steady pace, racking up carloads of free cash flow to hand out to investors through dividend hikes and share buybacks.

The railway is literally the backbone of the U.S. and Canadian economies with the industry’s only rail network that touches three coasts.

Rail mergers tend to run into regulatory roadblocks and new lines are not likely to be built alongside existing routes, so CN’s competitive advantage is probably set to continue.

Management still works hard to ensure the company is very efficient, as the business has to compete with truckers and other rail companies along some routes. CN regularly reports an industry-leading operating ratio and is widely viewed as the best-run company in the sector.

Revenues fluctuate with economic cycles, but this business keeps delivering solid results, even during challenging times.

What about returns?

An $10,000 investment in CN just 20 years ago would be worth $367,000 today with the dividends reinvested.

Is one more attractive?

Both companies should continue to be strong buy-and-hold picks for an RRSP portfolio.

If you only buy one, CN probably offers better divided-growth over the medium term, so I would make the railway the first choice today.

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Fool contributor Andrew Walker has no position in any stocks mentioned. David Gardner owns shares of Canadian National Railway. The Motley Fool owns shares of Canadian National Railway. Canadian National Railway is a recommendation of Stock Advisor Canada.

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