RRSP Investors: 2 Undervalued Gems to Hold for Decades

The after-effects of the last year’s crash can still be seen in some of the undervalued stocks that you can buy and hold for decades.

| More on:
diamonds, hidden gems

Image source: Getty Images

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.

Foolish takeaway

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.

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.

More on Dividend Stocks

worry concern
Dividend Stocks

Worried About a Recession? 2 Canadian Blue-Chip Stocks to Buy and Hold for Dear Life

A recession is worrisome. Buying two blue-chip TSX stocks and holding them for the long term will deliver stable, less…

Read more »

money cash dividends
Dividend Stocks

TFSA: 3 of the Best Canadian Dividend Stocks to Buy This Year

Are you looking for some of the best Canadian Dividend stocks to buy this year? Here are three great options…

Read more »

Man data analyze
Dividend Stocks

2 Recession-Tough Stocks to Buy in February 2023

TSX stocks, such as Jamieson Wellness, are trading at compelling valuations and might deliver stellar gains to investors.

Read more »

A worker overlooks an oil refinery plant.
Dividend Stocks

Defensive Investors: 3 Stocks to Shore Up Your Portfolio

Fortis is a defensive stock with an impressive track record.

Read more »

edit Woman calculating figures next to a laptop
Dividend Stocks

Passive Income: 2 Cheap Stocks to Buy and Never Sell

Buying dividend stocks cheap and discounted is a strategy many value investors pursue to maximize the return potential.

Read more »

Female friends enjoying their dessert together at a mall
Dividend Stocks

Dividend Stocks: Will Debt Load Put a Damper on This Top Stock in 2023?

This dividend stock has a very solid track record of revenue and cash flow growth, ,as well as dividend growth,…

Read more »

A plant grows from coins.
Dividend Stocks

How to Invest in One of the Most Important Commodities in the World (It’s Not Gold)

Many things we take for granted may offer economic value and a powerful investment opportunity beyond commodities like gold or…

Read more »

growing plant shoots on stacked coins
Dividend Stocks

Need Passive Income? Turn $15,000 Into $1,016 Annually With These 2 Dividend Stocks

Canadian investors with limited capital can create passive-income streams from two high-yield dividend stocks.

Read more »