RRSP: 2 Passive-Investing Ideas for a Comfortable Retirement

Save regularly in your RRSP for passive investing for a comfortable retirement. How do these dividend stocks sound?

It is the Registered Retirement Savings Plan (RRSP) season. The RRSP deadline for the 2022 tax year is March 1, 2023. Canadians should take a proactive approach. If possible, save and invest regularly in your RRSP instead of delaying until RRSP season to make contributions, especially if you know how much you’ll be earning (and therefore know the size of contribution that makes sense).

Because we have a progressive income tax system in Canada, it means the more income you earn in a year, the more you will be taxed for your next dollar of income based on your marginal tax rate. Consequently, in many cases, it makes sense to make numerous RRSP contributions every year instead of a big lump sum contribution in a single year.

Here are some solid dividend stocks you can consider buying and holding for passive investing. That is, you can add to your positions over time opportunistically on dips.

U.S. dividend stocks

U.S. dividend stocks that pay qualified dividends could be an excellent addition for your investment portfolio. U.S. stocks can provide more diversification in terms of sector and geography exposure. By investing these stocks in your RRSP (or RRSP turned Registered Retirement Income Fund in the future), there are no U.S. foreign withholding tax on the dividends — unlike holding the shares anywhere else. You want to hold U.S. stocks that offer nice dividend yields in your RRSP/RRIF.

One U.S. dividend stock that looks interesting right now is Public Storage (NYSE: PSA). Rising interest rates increased the cost of capital for companies and brought stock valuations down, including for the industrial real estate investment trust (REIT) in the self-storage space.

Earlier this month, the REIT increased its common stock dividend by a whopping 50%, boosting its dividend yield to about 4% at writing. It could be a good time to pick up the value stock that can continue growing at a stable rate of about 6%.

At $300 per share at writing, analysts believe the stock trades at a slight discount of about 11%. So, excluding valuation expansion potential, the stock might deliver annualized returns of about 10% over the next few years.

Other dividend stocks

You can also invest in other quality dividend stocks right on the TSX if you have excess room in your RRSP. For example, Brookfield Infrastructure Partners L.P. (TSX: BIP.UN) stock has dipped meaningfully by about 17% from its 52-week and all-time high. The utility has a proven track record of execution and delivering market- and industry-beating returns. Over the last decade, it returned about 16.8% per year, which roughly doubled investors money every 4.3 years, approximated by the Rule of 72.

It owns and operates a portfolio of long-life infrastructure assets that are diversified across industry and geography. Therefore, it has unlimited opportunities for investment based on the best risk-adjusted returns in any economic environment.

At $46.60 per unit at writing, the stock yields about 4.4% and analysts believe it trades at a discount of approximately 20%.

Foolish investing takeaway

Grow your funds tax free until retirement, at which time you have to withdraw a certain percentage every year that will be taxed as ordinary income. Currently, Public Storage and Brookfield Infrastructure Partners are decent dividend stocks for consideration in an RRSP.

Fool contributor Kay Ng has positions in Brookfield Infrastructure Partners. The Motley Fool recommends Brookfield Infrastructure Partners. The Motley Fool has a disclosure policy.

More on Dividend Stocks

man shops at grocery store
Dividend Stocks

A High Dividend Yield Can Be a Warning Sign: Here’s Why

A high dividend yield can signal trouble. TELUS and Slate Grocery REIT show why investors should examine what supports their…

Read more »

Real estate investment concept
Dividend Stocks

Paying Off the Mortgage or Saving for Retirement First? A Guide for Your 40s and 50s

Find out how rates, renewals and tax rules shape your choice in your 40s and 50s, and where blue chip…

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

$14,000 in a TFSA: 2 Stocks I’d Buy for Meaningful Monthly Cash Flow

Cardinal Energy (TSX:CJ) and another monthly income play that's fit for those seeking huge dividends and deeper value.

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

How to Use a TFSA to Generate an Average of $500 in Monthly Tax-Free Income

Unlock the potential of a TFSA for tax-free savings. Discover strategies to generate income while minimizing taxes for the future.

Read more »

senior man smiles next to a light-filled window
Dividend Stocks

This Stock Pays You a 4.7% Dividend Every Single Month

Sienna Senior Living's seemingly safe 4.7% monthly dividend yield, eligible dividend tax perks, and strong growth potential appear attractive today

Read more »

Piggy bank with word TFSA for tax-free savings accounts.
Dividend Stocks

Most Canadians Pick the Wrong Investing Account First: Don’t Be One of Them

Your first investing account matters far more than your first stock. Compare the TFSA, RRSP and FHSA for 2026 and…

Read more »

money goes up and down in balance
Dividend Stocks

Building a Retirement Paycheque: Where Each Dollar Comes From

Thinking about retirement? Find methods to create passive income to cover daily expenses and enhance your financial freedom.

Read more »

Three children jump on an outdoor trampoline
Dividend Stocks

The RESP Deadline is December 31: Ottawa Adds 20% for Free

An affordable RESP contribution can attract a 20% basic grant, with December timing, catch-up limits, and the child's age shaping…

Read more »