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
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.
