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RRSP Investors: Should You Buy Fortis Inc. or Telus Corporation?

Canadians are searching for top stocks to put in their self-directed RRSP portfolios.

Let’s take a look at Fortis Inc. (TSX:FTS)(NYSE:FTS) and Telus Corporation (TSX:T)(NYSE:TU) to see if one is more attractive today.

Fortis

Fortis owns natural gas distribution, power generation, and electricity transmission assets in Canada, the United States, and the Caribbean.

The company has grown significantly over the years through strategic acquisitions, and that trend continues.

Last year, Fortis paid US$11.3 billion for Michigan-based ITC Holdings Corp., the largest independent transmission company in the United States. The deal comes on the heels of a US$4.5 billion takeover of UNS Energy, based in Arizona.

The recent focus on U.S. businesses means Fortis now has about 60% of its assets located in the United States. That’s attractive for Canadian investors who want solid exposure south of the border through a Canadian company.

Fortis gets more than 90% of its revenue from regulated assets, which means cash flow should be predictable and reliable.

Management has raised the dividend every year for more than four decades and expects to increase the payout by at least 6% per year through 2021.

The current distribution provides a yield of 3.8%.

Telus

Telus enjoys a comfortable existence in the cozy Canadian communications sector.

Some pundits feel the company might be at a disadvantage due to its decision to avoid spending billions on media assets. Time will tell on that front, but Telus appears to be doing just fine without owning sports teams and TV networks.

Part of the success lies in a strong commitment to provide industry-leading customer service. The company invests heavily to ensure its subscribers are happy, and the strategy is paying off.

Telus regularly reports the lowest post-paid mobile churn rate among its peers, and it has generated higher blended average revenue per user numbers for 24 straight quarters on a year-over-year basis.

Instead of playing the media game, Telus is investing heavily in its Telus Health division. The group is already a leading provider of digital health solutions to doctors, hospitals, and insurance companies, and investors could see the group become a much larger contributor to earnings in the coming years.

Telus also has a strong track record of dividend growth. The current payout offers a yield of 4.5%.

Is one more attractive?

Both companies should be considered solid buy-and-hold picks for an RRSP portfolio.

Telus offers a higher dividend yield, but Fortis provides attractive exposure to the United States. At this point, I would call it a draw between the two names.

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

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