3 Top TSX Index Dividend Stocks to Build RRSP Wealth

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

| More on:
Glass piggy bank

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

Canadian savers are topping up their RRSP accounts ahead of the 2018 tax year deadline, and many are wondering how they should invest the funds.

One proven strategy involves buying dividend stocks and using the distributions to acquire additional shares. Over time, the power of compounding can turn small original investments into a significant RRSP portfolio.

Let’s take a look at three TSX Index leaders that might be interesting picks right now for your self-directed RRSP.


Global population growth is expected to continue at a steady pace in the coming decades, and that poses a challenge for the planet’s farmers, who will be asked to produce more food with consistently less land.

One part of the solution involves the use of fertilizers to boost crop yield, and Nutrien is the world’s largest crop nutrient company. In addition, the firm has a growing retail division that sells seed and crop protection products to farmers around the world.

Nutrien reported adjusted net earnings of US$2.69 per share in 2018 and expects 2019 to be US$2.80-3.20 per share, supported by strong demand and improved pricing.

The company raised the dividend by 7.5% for 2019, and investors should see strong free cash flow growth drive the payout higher in the coming years.

The current distribution provides a yield of 3.3%.

Royal Bank of Canada (TSX:RY)(NYSE:RY)

Royal Bank generated profits of more than $12 billion in fiscal 2019. That’s an impressive sum, and despite the company’s size, earnings growth is expected to continue at a pace of 7-10% per year.

The bank is strong across a variety of segments in the financial sector, including personal and commercial banking, capital markets, wealth management, insurance, and investor and treasury services.

Royal Bank has the financial firepower to invest in digital banking platforms to ensure it remains competitive as the industry evolves.

Dividend growth came in at 8% in 2018, and the distribution should rise in step with earnings growth in the coming years. Investors who buy today can pick up a yield of 4.7%.

Telus (TSX:T)(NYSE:TU)

Telus is a major player in the Canadian communications market, providing mobile, internet, and TV service to customers across its world-class network infrastructure.

The company to continues to invest in upgrades to ensure it can meet growing broadband demand, and its focus on customer satisfaction is showing up in the results. Telus has the lowest postpaid mobile churn rate in the industry and added 164,000 new customers in Q4 2018. That was the best Q4 result in four years.

Free cash flow improved 24% in 2018, and management expects to see strong results again in 2019 now that the company is past the peak of a major capital program.

Telus raised its dividend by just under 8% in the past year. The existing quarterly payout of $0.545 per share provides an annualized yield of 4.6%.

The bottom line

Nutrien, Royal Bank, and Telus are all top stocks in the TSX Index and should be solid buy-and-hold picks for a dividend-focused RRSP 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 owns shares of Nutrien. Nutrien is a recommendation of Stock Advisor Canada.

More on Dividend Stocks

Dividend Stocks

2 Undervalued TSX Dividend Stocks to Buy in July

These unloved TSX dividend stocks could deliver attractive returns in the back half of 2022.

Read more »

sad concerned deep in thought
Dividend Stocks

$20 Billion Telco Merger: More Concessions and Conditions Ahead?

The mediation process in the proposed telco merger could lead to more concessions and conditions before the competition watchdog grants…

Read more »

Dividend Stocks

RRSP Investors: 2 Cheap TSX Dividend Stars to Buy for Total Returns

RRSP investors seeking attractive total returns can now buy top TSX dividend stock with high yields at discounted prices.

Read more »

rail train
Dividend Stocks

Canadian Pacific Railway (TSX:CP): A Top Wide-Moat Stock to Buy and Hold Forever

CP Rail keeps the goods moving around the country. Here’s why it’s a great pick for new investors.

Read more »

Businessmen teamwork brainstorming meeting.
Dividend Stocks

The 3 Top Large-Cap Stocks for TSX Investors

Have peace of mind by investing in top large-cap stocks during this market correction. Start researching BAM (TSX:BAM.A)(NYSE:BAM)!

Read more »

Golden crown on a red velvet background
Dividend Stocks

3 Dividend Aristocrat Stocks to Buy and Hold Forever

Three Dividend Aristocrats are excellent holdings for new and old investors with long-term financial goals.

Read more »

Dividend Stocks

Top TSX Stocks: 2 Industry Leaders to Own for 25 Years

These top TSX stocks pay attractive dividends and have made some long-term investors quite wealthy.

Read more »

Senior Couple Walking With Pet Bulldog In Countryside
Dividend Stocks

Retirees: 2 Great TSX Dividend Stocks to Buy Now for TFSA Passive Income

These stocks look cheap to buy for a TFSA focused on passive income.

Read more »