3 Stocks With Growing Dividends for Self-Directed RRSP Investors

Here’s why Telus Corporation (TSX:T)(NYSE:TU) and another two top dividend picks deserve to be on your RRSP radar.

Canadian savers have access to much more investing information today than they did in the past, and that is helping people who want to take control of their retirement planning.

One popular method involves using self-directed RRSP accounts to hold top-quality dividend stocks. The contributions reduce taxable income today, while giving the investor the opportunity to use the dividends inside the RRSP to buy new shares and grow the portfolio for decades.

Let’s take a look at three stocks that might be of interest.

Suncor Energy Inc. (TSX: SU)(NYSE: SU)

Suncor might not be the first name that comes to mind when you think about dividend stocks, but the company probably deserves more respect. Despite the turmoil in the energy sector, Suncor has continued to increase its payout; it raised the distribution by 12.5% for 2018.

The oil recovery has occurred at just the right time for this company. Suncor wrapped up both its Fort Hills and Hebron developments at the end of 2017, and the two facilities are ramping up production ahead of schedule. These assets have decades of production potential and should deliver a nice boost to revenue and cash flow in the coming years.

Suncor’s Syncrude site was just hit by a major power outage that is expected to keep the plant out of service until August, so the company isn’t without risk. However, Suncor also operates four large refineries and owns a network of retail locations under the Petro-Canada brand. These assets provide a nice hedge against downturns in the production businesses.

The current dividend generates a yield of 2.7%.

Telus Corporation (TSX: T)(NYSE: TU)

Telus is Canada’s bread-and-butter communications business, with a focus on delivering the best customer service in the industry to its wireless and wireline customers. The company regularly reports the lowest post-paid mobile churn rate in the sector and continues to see mobile revenue grow, as people consume more data using their smartphones.

Telus Health generates a small part of the current income, but the division is Canada’s leading provider of digital healthcare solutions to doctors, hospitals, and insurance companies, and it has the potential to be a major growth segment for the company.

Telus has a great track record of dividend growth, and the share price tends to hold up well when the broader market takes a hit. Management says the company is beyond the halfway point in a major broadband network upgrade, so more cash flow should be available for distributions in the coming years. At the time of writing, the stock provides a yield of 4.5%.

Power Financial Inc. (TSX:PWF)

Power Financial is a holding company with Canadian interests in wealth management and insurance players, including IGM Financial and Great-West Lifeco. It also has a stake in a European holding company, Pargesa, which owns positions in a variety of top global businesses.

Rising interest rates appear to be the name of the game for the next few years, and that should be good news for Power Financial. Higher rates enable insurance companies to earn better returns on the cash they have to keep available to cover claims.

The company pays a quarterly dividend of $0.433 per share for a yield of 5.6%.

The bottom line

An equal investment across all three stocks would provide balanced exposure across industries while setting the portfolio up with an average dividend yield of better than 4%.

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

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