When it comes to planning for retirement, investing in stocks might not be the first choice that comes to the minds of many investors. After all, many bonds now offer yields at or above 5%, and if we are headed into a recession, that’s a decent yield to lock in.
However, if you find and invest in the right stocks, the long-term returns, these investments provide can really set you up for a golden retirement.
But where should you start? Here’s a list of the top three stocks I think could fit in most investors’ Registered Retirement Savings Plans (RRSPs) right now.
Fortis
Fortis (TSX:FTS) remains among the top Canadian dividend stocks long-term investors should consider. For those entering or nearing retirement, this company remains my number one pick in this current market environment.
This is mostly due to Fortis’s 50-year history of raising its dividend each and every year. No matter the environment, this utility stock has found a way to grow its cash flows and its distributions to shareholders.
Fortis has also seen strong institutional interest in its stock, signalling a broad and stable investor base. Currently, around 56% of the company’s shares are owned by big-money investors — a good sign for the little investor setting up their RRSP.
Restaurant Brands
Restaurant Brands International (TSX:QSR) stock has provided an average return on equity (ROE) of 17% in the hospitality industry, which is undeniably positive. Nevertheless, it is essential to consider that a high ROE does not automatically indicate efficient profit generation.
Notably, Restaurant Brands International relies significantly on debt to enhance its returns, which is evident from its debt-to-equity ratio of three. While its ROE remains commendable, it is likely that without the reliance on debt, the ROE would have been lower.
However, with the company’s recent acquisitions and improved interest in its defensive business model, this is a company I think is worth considering for the long haul, particularly for those looking to position against economic weakness on the horizon.
Dream Industrial REIT
Dream Industrial Real Estate Investment Trust (TSX:DIR.UN) is a Toronto-based open-ended real estate investment trust (REIT) that had its initial public offering on October 4, 2012. The primary goal of the trust is to deliver portfolio growth and attractive returns to its unitholders. Boasting a substantial portfolio, the trust manages around 221 assets and 326 industrial buildings, totalling approximately 39.8 million square feet of gross leasable area spread across various locations, including Canada, Europe, and the United States.
Dream Industrial REIT announced its first-quarter report in March 2023. The net rental income amounted to $81.5 million, showing a significant 24.7% rise from the $65.3 million recorded in the first quarter (Q1) of 2022. Meanwhile, the company’s net loss in Q1-2023 was $17.7 million, indicating a substantial reduction of $460.6 million when compared to the net income ofA$442.9 million in Q1-2022.
As of March 31, 2023, Dream Industrial’s Net Asset Value per Unit stood at $17.03, 3.3% higher on a year-over-year basis. If these sorts of numbers continue to roll in, this is a REIT worth considering on any dips related to the housing market moving forward (which I’m anticipating we’ll get).
