When the stock market crashed suddenly in 2020 due to the pandemic-stricken panic, many stock market investors missed the opportunity to leverage the rally that quickly followed. It was a great chance for investors to pick up shares of high-quality dividend stocks at heavily discounted prices.
With 2023 having been a rollercoaster of a year for Canadian stock market investors, now might be a good time to identify such high-quality picks.
Buying stocks on the dip is difficult. When the market is volatile, it is a good opportunity to scoop up shares of high-quality but discounted stocks. The key to using the pullback successfully is identifying stocks that can recover and continue paying shareholder dividends.
Making the right picks and adding them to your self-directed Registered Retirement Savings Plan (RRSP) portfolio can mean tax-sheltered wealth growth to align with your retirement plan. Today, we will look at two top dividend stocks that might warrant a place in your RRSP to help you build your retirement nest egg.
Royal Bank of Canada
Royal Bank of Canada (TSX:RY) is a $167.07 billion market capitalization Canadian multinational financial services company and the largest among Canada’s Big Six banks. Headquartered in Toronto, it is also the biggest publicly traded company on the TSX.
Higher interest rates led to pullbacks in the stock market across the board. While effective in cooling inflation, the interest rate hikes will likely trigger a deeper economic downturn.
If that happens, financial institutions are likely to suffer heavy losses. However, RBC stock has seen several of those come and go, only to come out stronger when the dust settles.
Well capitalized and well managed, Royal Bank of Canada is well positioned to weather near-term volatility to make it through to the other side. As of this writing, Royal Bank of Canada stock trades for $119.14, paying its shareholders their dividends at a 4.53% dividend yield.
Enbridge
Enbridge (TSX:ENB) is a $96.84 billion market capitalization giant in the Canadian energy industry. Just as RBC stock is the industry leader among Canadian banks, Enbridge stock has established itself as the leading entity in the Canadian energy sector.
Headquartered in Calgary, Enbridge owns and operates energy pipelines throughout Canada and the United States. Transporting a significant chunk of hydrocarbon products used in North America, its services are essential to the region’s economy.
Energy companies use debt to at least partially fund capital projects. With interest rates higher, Enbridge stock has seen its borrowing costs rise, negatively affecting its profits and cash available for distributions. However, the energy giant continues to put up excellent numbers on its operational side.
As the demand for traditional energy products remains high, Enbridge stock can continue growing shareholder value.
With its growing renewable energy portfolio, the company is also future-proofing itself for a greener energy industry future. As of this writing, Enbridge stock trades for $45.56 per share, boasting a juicy 7.79% dividend yield that you can lock into your RRSP portfolio today.
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Foolish takeaway
RRSP investing is an excellent way to put your money to work in the stock market and generate wealth without incurring taxes. Granted, taxes will be applicable when you withdraw after retirement.
Still, building a well-balanced portfolio and maintaining it with discipline until then can help you see immense wealth growth. To stay invested, you must find and invest in stocks capable of providing returns and long-term wealth growth for decades.
As leaders in their respective industries, Royal Bank of Canada and Enbridge stocks can be excellent picks to build foundations for a self-directed RRSP portfolio.
