2 Top Canadian Dividend Stocks to Help Boost Your RRSP Savings

Fortis Inc. (TSX:FTS)(NYSE:FTS) and Toronto-Dominion Bank (TSX:TD)(NYSE:TD) are popular picks among dividend investors. Is one more attractive right now?

| More on:

Canadian investors are searching for reliable companies to add to their self-directed RRSP portfolios.

Let’s take a look at Fortis Inc. (TSX:FTS)(NYSE:FTS) and Toronto-Dominion Bank (TSX:TD)(NYSE:TD) to see why they might be interesting picks.

Fortis

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

The company has grown significantly in recent years through large acquisitions in the United States.

In 2014, Fortis bought Arizona-based UNS Energy for US$4.45 billion. Last year, Fortis acquired Michigan-based ITC Holdings for US$11.3 billion.

Both purchases are delivering solid contributions to earnings. Fortis reported Q2 2017 adjusted net income of $0.61 per share compared to $0.45 per share in the same period last year. Cash flow from operating activities rose 28% in the first half of the year compared to the first six months of 2016.

Management plans to raise the dividend by at least 6% per year through 2021. Fortis has increased the payout every year for more than four decades, so investors should feel comfortable with the guidance.

At the time of writing, the dividend provides a yield of 3.5%.

TD

TD is widely viewed as Canada’s safest bank.

This is important in the current environment, as investors wonder if a pullback in the housing market could have a negative impact on the sector.

TD’s mortgage portfolio is large, but insured loans represent 47% of the mortgages, and the loan-to-value ratio on the rest is 49%. As a result, house prices would have to fall significantly before the bank takes a material hit.

TD gets most of its income from bread-and-butter retail banking operations, which tend to be more stable than other areas, such as capital markets.

The bank has invested heavily in building its U.S. presence over the past decade, and the American retail operations now contribute more than 30% of earnings, providing a nice hedge against any economic upheaval in the Canadian market.

TD’s annualized dividend-growth rate for the past two decades is 11%, and investors should see steady payout increases continue in the coming years.

The dividend yield is 3.8%.

Is one more attractive?

At this point, I would probably split a new RRSP investment between the two stocks. Both companies should be solid buy-and-hold picks for the portfolio.

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

money goes up and down in balance
Dividend Stocks

This 6% Dividend Stock Is My Top Pick for Immediate Income

This Canadian stock has resilient business model, solid dividend payment and growth history, and a well-protected yield of over 6%.

Read more »

ways to boost income
Dividend Stocks

1 Excellent TSX Dividend Stock, Down 25%, to Buy and Hold for the Long Term

Down 25% from all-time highs, Tourmaline Oil is a TSX dividend stock that offers you a tasty yield of 5%…

Read more »

Start line on the highway
Dividend Stocks

1 Incredibly Cheap Canadian Dividend-Growth Stock to Buy Now and Hold for Decades

CN Rail (TSX:CNR) stock is incredibly cheap, but should investors join insiders by buying the dip?

Read more »

bulb idea thinking
Dividend Stocks

Down 13%, This Magnificent Dividend Stock Is a Screaming Buy

Sometimes, a moderately discounted, safe dividend stock is better than heavily discounted stock, offering an unsustainably high yield.

Read more »

Canadian Dollars bills
Dividend Stocks

Invest $15,000 in This Dividend Stock, Create $5,710.08 in Passive Income

This dividend stock is the perfect option if you're an investor looking for growth, as well as passive income through…

Read more »

A Canada Pension Plan Statement of Contributions with a 100 dollar banknote and dollar coins.
Dividend Stocks

3 Compelling Reasons to Delay Taking CPP Benefits Until Age 70

You don't need to take CPP early if you are receiving large dividend payments from Fortis Inc (TSX:FTS) stock.

Read more »

A worker overlooks an oil refinery plant.
Dividend Stocks

Better Dividend Stock: TC Energy vs. Enbridge

TC Energy and Enbridge have enjoyed big rallies in 2024. Is one stock still cheap?

Read more »

Concept of multiple streams of income
Dividend Stocks

Got $10,000? Buy This Dividend Stock for $4,992.40 in Total Passive Income

Want almost $5,000 in annual passive income? Then you need a company bound for even more growth, with a dividend…

Read more »