Better RRSP Buy: Royal Bank Stock or Enbridge Stock?

Royal Bank and Enbridge are TSX giants paying attractive dividends.

| More on:
Double exposure of a businessman and stairs - Business Success Concept

Image source: Getty Images

Canadian savers are searching for top TSX dividend stocks to add to their self-directed Registered Retirement Savings Plan (RRSP) portfolios. The market correction is giving investors a chance to buy industry leaders like Royal Bank (TSX:RY) and Enbridge (TSX:ENB) at discounted prices.

Royal Bank

Royal Bank is a leader in the Canadian financial sector with a current market capitalization of close to $182 billion. The bank generated net income of $15.8 billion in fiscal 2022. Return on equity (ROE) came in at 16.4% and the bank finished the fiscal year with a common equity tier-one (CET1) ratio of 12.6%. This is a measure of the bank’s capital position and indicates its ability to ride out a financial crisis. The Canadian banks are currently required to have a CET1 ratio of at least 11%, so Royal Bank ended its fiscal year sitting on significant excess cash.

Royal Bank trades near $131 per share at the time of writing. That’s down from $139 in February but still up from the $118 the stock dipped to in October.

Royal Bank is holding up better than some of its peers amid the recent volatility in the banking sector. Investors see the largest banks, as beneficiaries in the event there is another flight of deposits from small financial institutions. Recent bank failures in the United States and Europe have caused investors to flee smaller banks.

Royal Bank isn’t immune to economic downturns or a financial crisis, but the stock should be a solid buy-and-hold pick for RRSP investors seeking decent long-term total returns. The dividend currently provides a 4% yield.


Enbridge is another TSX giant with a current market capitalization near $106 billion. The stock trades for close to $52 at the time of writing compared to more than $59 last June. Investors can take advantage of the pullback to secure a 6.8% dividend yield and look forward to steady dividend increases in the coming years supported by the $18 billion capital program and any new acquisitions that the company decides to make. The board raised the distribution in each of the past 28 years.

Enbridge is shifting its strategy away from the construction of major oil pipelines to new opportunities in the energy market. The firm bought an oil export terminal in Texas in 2021 and is a partner in the Woodfibre LNG project in British Columbia. The facility will ship liquified natural gas to international buyers.

Enbridge is also expanding its renewable energy portfolio. The company completed an offshore wind project in France last year and also acquired a renewable energy developer in the United States.

Domestic and international demand for Canadian and U.S. oil and natural gas is expected to grow in the coming years. Enbridge’s pipeline and storage infrastructure is strategically important and should become more valuable over time. Opposition to new pipeline projects now makes it very difficult to get new capacity approved and built.

Is one a better RRSP bet?

Royal Bank and Enbridge are industry leaders with attractive dividends that should continue to grow. Both stocks deserve to be on your radar for a self-directed RRSP portfolio.

If you only choose one, Enbridge pays a higher yield and is likely oversold at the current share price, so I would probably make the energy infrastructure player the first choice today.

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.

The Motley Fool recommends Enbridge. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker owns shares of Enbridge.

More on Investing

potted green plant grows up in arrow shape
Dividend Stocks

Best of Both Worlds: 3 Growth Stocks That Also Pay Dividends

Dividend stocks are great until a downturn ends. But luckily, these three dividend stocks also offer a massive amount of…

Read more »

data analyze research

2 Stocks to Invest in a Sideways Economy

Low-volatility dividend stocks from Canada's utility sector can be great picks for stagnant times.

Read more »

Payday ringed on a calendar
Dividend Stocks

Monthly Passive Income: 2 Top TSX Dividend Stocks to Buy in June 2023

Here are two of the best TSX monthly dividend stocks you can buy in June 2023.

Read more »

Female hand holding piggy bank. Save money and financial investment
Dividend Stocks

RRSP Wealth: 2 Great Canadian Dividend Stocks to Buy in June 2023

Top TSX dividend stocks are now on sale.

Read more »

Retirees sip their morning coffee outside.
Dividend Stocks

Retirees: 2 TSX Dividend Stocks That Reliably Pay You Cash

With strong underlying businesses, high-yielding dividends, and stable cash flows, these two TSX stocks can be excellent investments to consider.

Read more »

Road signs rerouting traffic

TSX Stocks in the Transportation Industry: Which Ones Are Worth Your Investment?

Transportation stocks trading on the TSX are well positioned to deliver market-beating gains to investors in 2023 and beyond.

Read more »

sad concerned deep in thought
Dividend Stocks

Better Buy for TFSA Passive Income: Telus Stock or TD Bank? 

Your passive income depends on the dividend yield you lock in. Telus and TD Bank are good investments, but which…

Read more »

Dividend Stocks

Turn a $10,000 Investment Into $844 in Cash Every Year

The power of compound interest from regular investments in quality dividend stocks can deliver solid long-term returns and make you…

Read more »