RRSP investors are using their self-directed online brokerage accounts to buy top TSX dividend stocks that pay growing distributions and offer attractive long-term returns.
Telus
Telus (TSX:T)(NYSE:TU) is a good defensive stock for a retirement portfolio. The company provides essential communications services that homes and businesses need regardless of the condition of the economy. Telus has the power to raise prices when it requires extra cash to cover investments in new network infrastructure or to offset rising costs. This is attractive for investors in the current environment of high inflation.
Telus has a great track record of dividend growth. Investors received a 5% raise in late 2021 and larger annual distribution increases could be on the way beginning in 2023 once the heaviest part of the current capital program has peaked. Telus is building out its 5G network and is nearing he end of its copper-to-fibre transition.
RRSP investors who buy the stock at the time of writing can pick up a 3.9% dividend yield.
Suncor
Suncor (TSX:SU)(NYSE:SU) has underperformed its peers during the rebound in the energy sector. Investors are still upset that Suncor slashed the dividend by 55% early in the pandemic when other oil producers held their payouts steady. In 2021, during the recovery in oil prices Suncor spent most of the year using excess cash to pay down debt and buy back stock. The board finally raised the dividend late last year, bumping it up by 100%. This brought the payout back to 2019 level. Investors now want to see another big payout increase to catch up with the distribution hikes the other major energy producers gave their shareholders in the past two years.
Suncor has also had some operational problems that are taking time to sort out. In the end, Suncor will get back on track, and it might be a good idea to add the stock to a buy-and-hold portfolio before the full turnaround is complete.
Suncor will likely report very strong Q1 2022 results, supported by the jump in the price of oil and the ongoing recovery in fuel demand. Oil prices will probably remain above US$80 per barrel through the rest of the year. At the same time, demand for jet fuel and gasoline could soar in the second half of 2022.
Suncor’s refining and retail operations historically provided a good revenue hedge against turbulence in the oil market. That’s why the stock used to be a top pick in the Canadian oil and gas sector. A return to the glory days might take a while, but the potential is there for strong total returns in the next few years.
Investors who buy Suncor stock now can pick up a 4% yield and wait for the share price to move higher.
The bottom line on top stocks for RRSP total returns
Telus and Suncor are top players in their industries. The companies pay good dividends that should grow steadily over the medium term. If you have some cash to put to work in a self-directed RRSP, these stocks deserve to be on your radar.
