Canadian savers are searching for reliable stocks to add to their self-directed RRSP.
Finding the best companies is not always easy, and many people don’t have the time to constantly monitor their portfolios to make sure they have the right mix. In fact, the ideal situation is to buy a stock and simply sit on it until retirement.
Let’s take a look at two companies that might be interesting picks today for a buy-and-hold RRSP portfolio.
The garbage business might not sound very exciting, but it hits many of the attractive checkpoints for RRSP investors. The industry is recession-resistant, as people and companies are going to consume goods and create waste regardless of the state of the economy. In addition, the sector has limited exposure to risks created by international geopolitical uncertainty.
Waste Connections grows through strategic acquisitions, and that trend is expected to continue as the industry consolidates.
The company reported a 10.7% increase in adjusted net income in Q1 2019 compared to last year. Adjusted free cash flow rose 19.8% to $246.3 million. The board raised the dividend by 14% in late 2018, and another double-digit increase could be on the way, given the strong results.
The stock has performed very well in the past five years, rising from $37 to the current price of $126 per share.
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The majority of the revenue is generated through regulated assets, meaning the cash flow should be predictable and steady. Fortis grows through acquisitions and organic developments.
The company spent more than US$15 billion on the purchases of UNS Energy and ITC Holdings in recent years. The deals shifted the bulk of the asset base to the United States and the businesses are performing as expected.
Fortis is currently working through a $17.3 billion capital program that should support average annual dividend increases of 6% through 2023. The company has increased the payout every year for more than four decades and currently provides a yield of 3.5%.
This stock tends to be a steady performer when the broader market hits a rough patch, and long-term investors have done well. Fortis trades at close to $52 compared to $26 per share 10 years ago.
The bottom line
Waste Connections and Fortis are strong companies and should be solid buy-and-hold picks for self-directed RRSP investors who don’t want to hover over their portfolios on a daily basis.
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 stock mentioned.