Registered Retirement Savings Plan (RRSP) users can claim tax deductions for income year 2023 on contributions made on or before February 29, 2024. However, if you cannot meet the deadline, you can maximize RRSP contributions to realize tax savings in the following income year.
The RRSP was introduced in 1957 following the amendment to the Income Tax Act. Because of the amendment, individuals can deposit or contribute to the plan for future retirement income. Today, the tax-sheltered investment vehicle remains one of the best Canadian retirement accounts.
Tax-sheltered means all gains or money growth inside the RRSP are tax-deferred. Users pay taxes on money withdrawn from the account. The Canada Revenue Agency (CRA) sets yearly contribution limits, and unused contribution limits carry over to the following year.
As mentioned, the best part is that RRSP contributions are tax-deductible. For income year 2024, the RRSP dollar limit is 31,560, or 18% of your earned income this year, whichever is lower.
Eligible investments
Cash, bonds, Guaranteed Investment Certificates (GICs), mutual funds, exchange-traded funds, and stocks are qualified investments in an RRSP. Most RRSP investors choose dividend stocks for recurring income streams and faster compounding of principal through dividend reinvesting.
If you plan to maximize your annual RRSP contributions for next year’s tax season, Keyera (TSX: KEY) and Nexus Industrial (TSX: NXR.UN) are ideal options. Besides the high yields, you’d have cash flow streams quarterly and monthly.
Crown jewel
Keyera used to pay monthly dividends but has switched to quarterly payments in 2023. At $34.05 per share, you can partake in the lucrative 5.87% dividend. The $7.8 billion midstream oil and gas company owns the 575-kilometre-long Key Access Pipeline System, or KAPS.
KAPS is Keyera’s crown jewel. The pipeline system transports natural gas liquids and condensates from northwestern Alberta to its natural gas liquid (NGL) infrastructure and condensate network in Fort Saskatchewan, Alberta. KAPS is a 50/50 joint venture with alternative investment Stonepeak, and Keyera is the pipeline operator.
The solid financial results in 2023 are compelling reasons to invest in Keyera. In 2023, net earnings and cash flow from operations increased 29.2% and 5.4% to $424 million and $975.5 million versus 2022. Keyera’s president and chief executive officer (CEO), Dean Setoguchi, said, “KAPS continues to deliver growth for Keyera while providing a much-needed alternative transportation solution for customers.”
Stable asset class
Nexus Industrial owns a portfolio of industrial (71.6%), retail (14.6%), and office (11%) properties in Canada’s primary and secondary markets. However, the $744.6 million real estate investment trust (REIT) is industrial-focused because of the strong demand for industrial space and the e-commerce boom.
At only $7.98 per share, you can feast on the over-the-top 8.02% divided. Assuming your holding is equivalent to the $30,780 RRSP dollar limit in 2023, the money will generate $205.71 in monthly passive income.
Its CEO, Kelly Hanczyk, said the industrial sector is a stable and favoured asset class. Nexus can endure industry headwinds, including the heightened interest rate environment.
Stellar RRSP stocks
Keyera and Nexus Industrial are stellar stocks for RRSP contributions. The former has a crown jewel, while the latter boasts a stable asset class.
