RRSP Investors: Buy and Hold These 2 Stocks for Decades!

CN Rail stock (TSX:CNR)(NYSE:CNI) is one of the best long-term buys for RRSP investors looking to take advantage of near-term volatility.

| More on:
consider the options

Image source: Getty Images

If you’re one of many rattled RRSP investors who’ve yet to put your latest contribution to work, it’s time to go on the hunt for opportunities while volatility is back. The greater the volatility, the more inefficient Mr. Market becomes at pricing stocks close to their true worth. Today, U.S. bond yields have many hitting the panic button with their growth stocks.

Bond market jitters: Don’t fear what everybody else fears!

I’d argue that the plunging Treasury note (bond yields rise as prices fall) ought to be the least of long-term RRSP investors’ concerns these days. The insidious coronavirus is still out there, and I’m inclined to side with the U.S. Federal Reserve over the bond market. The Fed is still not even thinking about thinking about raising interest rates here. They’re focused on employment and are willing to let the economy overheat over the near-term if it means improving the chances of getting the economy back to some form of normal.

In this piece, we’ll have a closer look at two TSX stocks that I believe are opportunities for RRSP investors truly long-term time horizons. Think 10, 20, or even 30 years, not just the next 18 months. With such a longer-term viewpoint, you’ll be less rattled by short-term climbs in bond yields that seem to have some hitting the panic button with their growthiest plays.

RRSP investors ought to manage their investors like Warren Buffett

Consider CN Rail (TSX:CNR)(NYSE:CNI) and CP Rail, two railway companies that can allow RRSP investors to sleep peacefully at night, without having to worry about what the bond and stock markets will do next week.

The railways are the ultimate wide-moat growth play. There’s a reason why Warren Buffett owns one outright! The Steady Eddie plays aren’t going to make Berkshire Hathaway rich overnight. But they will help the firm’s portfolio steadily outperform the market indices in any given year.

TFSA and RRSP investors ought to take a page out of the Oracle of Omaha’s playbook by treating their registered investment accounts as a place to maximize risk-adjusted returns, rather than a place to hit it big with speculative plays like Bitcoin, marijuana, Initial Public Offerings (IPOs), or a celebrity-run SPAC.

TFSA or RRSP investors willing to think longer-term have a lot to gain over the decades with either one of the top Canadian rails — and not just in terms of capital gains but dividend growth. Both CN and CP are dividend growth kings, which, when held over decades can help create a rock-solid passive income stream to fund a rich retirement.

CN and CP sport yields of 1.7% and 0.8%, respectively. Not exactly dividend stocks for passive income. But after many, many years’ worth of above-average dividend growth, you can expect the yield based on your invested principal to swell drastically over time. If you’re an RRSP investor focused on the long-term, forget near-term jitters. Focus on what matters: the real long-term.

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 Joey Frenette owns shares of Canadian National Railway. David Gardner owns shares of Canadian National Railway. The Motley Fool owns shares of and recommends Canadian National Railway. The Motley Fool recommends Canadian National Railway.

More on Dividend Stocks

Payday ringed on a calendar
Dividend Stocks

2 Reliable Dividend Stocks to Earn $191/Month in Passive Income

After a strong start to the year, the TSX is going through another downturn. At writing, the S&P/TSX Composite Index is …

Read more »

edit Sale sign, value, discount
Dividend Stocks

3 Top Dividend Stocks That You Can Buy Under $50

The global equity markets have turned volatile over the last few weeks amid the fear that the U.S. Federal Reserve …

Read more »

ETF chart stocks
Dividend Stocks

3 TSX ETFs to Buy for Big Dividends

Dividend-paying exchange-traded funds (ETFs) are excellent investment options for passive investors. Apart from instant diversification, would-be investors earn in two …

Read more »

grow dividends
Dividend Stocks

3 of the Best Dividend Growth Stocks That Money Can Buy

Long-term investing has several advantages, which is why so many well-known investors like Warren Buffett recommend it as a strategy. …

Read more »

investment research
Dividend Stocks

3 Cheap Canadian Stocks to Buy Now Before the Dividend Deadline!

Motley Fool investors have been searching high and low for safe stocks in this volatile market. The TSX today doesn’t …

Read more »

Glass piggy bank
Dividend Stocks

How to Accelerate Your TFSA Returns From Dividend Stocks

The stock market saw a correction in January, as investors booked profits ahead of the central bank’s interest rate hikes. The TSX …

Read more »

money cash dividends
Dividend Stocks

Top 3 Dividend Stocks in Canada for 2022

Canada is home to some of the best dividend stocks in the world. With finance, telecoms, and energy dominating the …

Read more »

calculate and analyze stock
Dividend Stocks

2 Top TSX Stocks to Put on Your TFSA Buy List

TFSA investors are searching for undervalued TSX stocks to buy that have the potential to deliver big gains in 2022. …

Read more »