Investing is a long-term game. Even if you are not very fond of Buffett’s advice or his value investment strategies, one of his notions that you have to agree with is that time is a very important component of investment. The more of it you can give to good investments, the better it might be for you in the long run. That’s especially true when it comes to preparing your RRPS portfolio.
Even though many people prefer saving for their retirement in their TFSAs as well, and it’s a valid strategy, the RRSP was specifically designed for with that purpose in mind. And even though you can make changes to your RRSP portfolio over the years, a portion of it that can grow and compound for decades can be crucial for your retirement nest eggs.
And if you are considering stocks that you might be able to hold on to for decades, there are two that should be on your radar.
Canada’s largest private mortgage insurance provider
Genworth Canada, which has now been rebranded to Sagen (TSX:MIC) (though the symbol is the same), is an Oakville-based private mortgage insurance company with a market capitalization of $3.6 billion. The company offers a wide bouquet of mortgage insurance products, including insurance for new arrivals in the country.
The name change has come with an exceedingly static month of trading. The share price is still heavily discounted compared to what it was before the crash (over 28%), and the company is trading for a price to earnings of just 8.6 and a price to book of one.
The company has a decent history of growth, which is evident from its 10-year CAGR of 12.5%. It’s also quite generous with special dividend payments, which tend to skew its yield, but even considering its regular dividends, the yield of 4.9% is generous enough.
A small REIT
REITs are known for their generous yield, but some REITs also pack a decent amount of “growth” punch as well, and Morguard North American REIT (TSX.MRG.UN) is one of them, though the situation has changed quite a bit since the crash. But that’s beneficial, because you can now get this stock at a heavily discounted price tag and lock in a juicy 4.6% yield.
The REIT has over $3.1 billion in real estate assets. Its property portfolio consists of multi-suite residential rental properties in both the country and the United States. The geographically diversified portfolio, its five-year CAGR of 10%, and a very sustainable payout ratio make it a decent long-term holding.
Putting growth-oriented dividend stocks in your RRSP portfolio can help you in multiple ways. You can re-invest the dividends to beef-up your payouts once you finally use the dividend stock to create an income stream. Or you can use it to make a small cash reserve in the RRSP which can divert to other investments (once it grows sizeable enough) every few years.
Speaking of two stocks RRSP investors can hold onto for decades...
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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 Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends MORGUARD NA RESIDENTIAL REIT UNITS.