Buy-and-Hold RRSP Investors: 2 Dividend Stocks That Won’t Keep You Up at Night

Canadians are searching for reliable dividend stocks to own inside their RRSP portfolios.

The strategy makes sense, especially when the dividends are invested in new shares to take advantage of the power of compounding. Over time, modest and steady investments can grow to become a substantial nest egg.

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

BCE

BCE continues to add strategic assets to boost its dominant position in the Canadian communications market.

Earlier this year, BCE bought Manitoba Telecom Services in a move that bumped BCE into the top spot in the Manitoba market and positioned the company for an expansion of its presence in the western provinces.

Recently, the company announced an agreement to buy home-security firm AlarmForce.

BCE is primarily known for its mobile, TV, and internet services, but the company also owns a large media division that includes sports teams, radio stations, a television network, specialty channels, and an advertising business.

When the wireless and wireline infrastructure business is combined with the media assets, you get a powerful company that is capable of interacting with most Canadians on a daily basis.

BCE generates solid free cash flow to support its generous dividend. The current payout provides a yield of 4.7%.

TD

TD is primarily known for its Canadian operations, but the banking giant actually has more branches located in the United States than it does in its home country.

The American operations generate more than 30% of TD’s profits and provide a nice hedge against any potential weakness in the Canadian economy.

Some pundits are concerned a pullback in Canadian house prices could hit TD and its peers. A total meltdown would certainly be negative, but most analysts predict a gradual decline in the market, and TD’s mortgage portfolio is more than capable of riding out a downturn.

The company has a strong track record of raising its dividend, with a compound annual dividend-growth rate of about 10% over the past 20 years.

Investors currently pick up a 3.3% yield.

Is one more attractive?

At this point, I would probably split a new investment between the two companies to get good exposure to both Canada and the U.S. while pocketing an average dividend yield of 4%.