2020 RRSP Picks: 3 Top Stocks to Secure Income of $12,333/Year

This group of dividend-growth streakers, including Suncor Energy (TSX:SU)(NYSE:SU), can help build your wealth the prudent way.

| More on:
A close up image of Canadian $20 Dollar bills

Image source: Getty Images

Hi, Fools. I’m back to highlight three top dividend-growth stocks. As a quick reminder, I do this because businesses with consistently increasing dividend payouts

  • can guard against the harmful effects of inflation by providing a rising income stream; and
  • tend to outperform the market averages over the long haul.

The three stocks below offer an average dividend yield of 4.9%. Thus, if you spread them out evenly in an average $250K RRSP account, the group will provide you with a growing $12,333 annual income stream. And it’s all completely passive.

Let’s get to it.

Renewed interest

Leading things off is renewable energy provider TransAlta Renewables (TSX:RNW), which has grown its dividend 22% over the past five years.

TransAlta’s solid network of 34 renewable power-generation facilities and diversified nature — wind, gas, hydro, solar — should continue to support steady dividend growth for many years to come. In the most recent quarter, adjusted funds from operations increased to $69 million while distributable cash improved by $2 million.

“We remain very focused on successfully commissioning our two U.S. wind projects prior to the end of the year,” said President John Kousinioris. “In addition, we are continuing work to add further accretive projects to our portfolio, including potential additional drop-down opportunities from TransAlta Corporation.”

TransAlta currently offer an attractive dividend yield of 6.5%.

Canadian bacon

With dividend growth of 55% over the past five years, electricity provider Canadian Utilities (TSX:CU) is next up on our list.

Canadian Utilities’s reliable dividend growth continues to be underpinned by economies of scale ($22 billion in assets), global reach (two million-plus customers worldwide), and highly stable cash flow. Over the past year, the company has generated $1.35 billion in operating cash flow, even amid softening revenue.

“Our success as a financially secure and stable energy infrastructure company is a result of our disciplined and prudent capital investment in utility and utility-like assets with regulated or long-term contracted earnings,” said CFO Dennis DeChamplain in the most recent conference call.

Canadian Utilities currently offers a dividend yield of 4.4%.

Sunny-side up

Rounding out our list is oil and gas giant Suncor Energy (TSX:SU)(NYSE:SU), which has grown its dividend 59% over the past five years.

Suncor’s stable payout growth continues to be backed by high-quality assets, a strong presence in the Athabasca oil sands, and hefty cash flow generation. In the most recent quarter, Suncor generated $2.7 billion in funds from operations, even as revenue declined 10%.

With that cash flow, management returned $1.4 billion to shareholders during the quarter through dividends and increased buybacks.

“Suncor generated $2.7 billion in funds from operations and $1.1 billion of operating earnings during the third quarter, reflecting the ability of our integrated business to deliver strong results across a wide range of market conditions” said CEO Mark Little.

Suncor shares currently offer an attractive dividend yield of 3.9%.

The bottom line

There you have it, Fools: three top dividend-growth stocks worth checking out.

As always, they aren’t formal recommendations. They’re simply a starting point for more research. The breaking of a dividend-growth streak can be especially painful, so plenty of due diligence is still required.

Fool on.

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 Brian Pacampara owns no position in any of the companies mentioned.   

More on Dividend Stocks

consider the options
Dividend Stocks

Is TD Bank the Best Dividend Stock for You?

Toronto-Dominion Bank (TSX:TD) has a high dividend yield but is embroiled in a serious money-laundering scandal.

Read more »

The TFSA is a powerful savings vehicle for Canadians who are saving for retirement.
Dividend Stocks

How to Use Your TFSA to Earn $6,000 Per Year in Passive Income

Hint: You'll need this Hamilton covered call ETF, which yields over 10%.

Read more »

Growth from coins
Dividend Stocks

2 Dividend-Growth Stocks With TSX-Beating Potential That Deserve More Respect

Here are two of the best TSX dividend-growth stocks you can buy today and hold for the next decade.

Read more »

Man pointing at a recycling symbol
Dividend Stocks

GFL Stock Rose 24% Last Month: Is It Still a Buy in July?

GFL stock (TSX:GFL) exploded by 24% in June, but is the growth now over for July? Or can investors still…

Read more »

A woman shops in a grocery store while pushing a stroller with a child
Dividend Stocks

Better Buy: Loblaw Stock or Metro Stock?

Loblaw (TSX:L) and another grocer that could do well over the long haul as markets get rocky.

Read more »

concept of real estate evaluation
Dividend Stocks

BRE Stock: Should You Buy the 10.5% Yield?

BRE stock (TSX:BRE) offers investors the opportunity for a rebound in a real estate sector that should see high prices…

Read more »

dividends grow over time
Dividend Stocks

Prediction: These Could Be the Best-Performing Value Stocks Through 2030

Seeking value stocks trading at a discount? These top value stocks could outperform through 2030 through valuation expansion.

Read more »

IMAGE OF A NOTEBOOK WITH TFSA WRITTEN ON IT
Dividend Stocks

3 TFSA Hacks to Build a $1 Million Tax-Free Nest Egg

These TFSA investing hacks could help convert $95,000 into $1 million tax-free. Here's how to get started.

Read more »