Stocks that fit in a Registered Retirement Savings Plan (RRSP) are a unique breed. Indeed, picking and choosing which stocks one wants to buy and hold for a long period of time isn’t easy. In this article, I’m going to highlight two of my high-conviction picks for readers with RRSPs to consider.
BMO
Bank of Montreal (TSX: BMO)(NYSE: BMO) continues to be a top pick of mine for those with RRSP portfolios. RRSP investing requires a “set it and forget it” mindset. This is a stock that certainly fits that description for investors. For those with income needs, this is a stock that has done wonders historically as well.
BMO has paid out a dividend for nearly two centuries (that’s centuries, not decades) straight, delivering value to shareholders each and every year. This is truly one of those Dividend Aristocrats investors looking for income in retirement to consider. The bank’s 4.2% yield is impressive, considering what bonds pay these days.
The bank’s business model is one I think is worth noting. BMO is extremely well diversified relative to its Canadian banking peers. The company has grown its footprint in the U.S. and could continue to do so in the years to come. With concerns around a Canadian housing crash starting to creep into the minds of investors, BMO is a great way to assuage those concerns.
Fortis
Another great dividend payer, Fortis (TSX: FTS)(NYSE: FTS) continues to be a top pick of mine for the long-term investor. This is a stock that is perfectly suited for an RRSP holding for so many reasons.
Indeed, Fortis’s business model is hard to come by, and this is one of the reasons I think Fortis is one of the best utility plays on the TSX right now. The majority of the company’s revenues are regulated, making Fortis’s income stream extremely stable. Until we see people turn the heat and lights off in their houses, nothing can stop the cash flow growth Fortis provides.
Again, the income piece is really important here. Fortis is a company that has a track record of nearly five decades of annual dividend increases. In good times and in bad, this is a company that pays you more to hold it. I think the reason this stock tends to hold up so well during times of crisis is the reliability of the company’s dividend policy. This dividend policy is, of course, supported by a business model that is rock solid, providing growing cash flows at an extremely predictable rate.
