2 Stocks I’ll be Adding to My RRSP – Even With the TSX at All-Time Highs

Whether you want growth or dividends, these two stocks offer exactly what investors need for long-term growth in an RRSP.

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published August 28, 2024 8:30 pm EDT

| More on: LUNVDY

The TSX has been on a remarkable run, reaching all-time highs. And there are a few key factors driving this surge. First and foremost is the strong performance of the energy and financial sectors. These pillars of the Canadian economy have played a significant role. With oil prices stabilizing and even climbing, energy stocks have been powering up, contributing to the TSX’s upward momentum. Meanwhile, the financial sector, buoyed by solid earnings from major banks and insurance companies, has added more fuel to the fire, helping to push the index to new heights.

So, how can investors get in on the action? Let’s look at two stocks to help your Registered Retirement Savings Plan (RRSP) climb higher.

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills. — Source: Getty Images

VDY

The Vanguard FTSE Canadian High Dividend Yield Index ETF (TSX:VDY) is an excellent choice to add to an RRSP, even as the TSX reaches all-time highs. One of the key reasons is its focus on high-quality, dividend-paying stocks. These offer both income and potential for capital appreciation. In a market environment where prices are elevated, having a steady stream of dividends can provide a cushion against market volatility. VDY’s portfolio is packed with some of Canada’s most stable and reliable companies, particularly in the financial and energy sectors, which have long histories of paying and increasing dividends. This makes VDY a solid defensive play, ensuring that your RRSP continues to grow even if the market faces a correction.

Another advantage of VDY is its cost-effectiveness and diversification. The Exchange-Traded Fund (ETF) has a low management expense ratio (MER). This means more of your money stays invested rather than being eaten up by fees. Additionally, VDY gives you exposure to a broad range of top Canadian dividend payers, reducing the risk associated with investing in individual stocks. This diversification, combined with the tax-sheltered growth potential in an RRSP, makes VDY an attractive option for long-term investors. Especially those who want to build a resilient portfolio that can weather the ups and downs of the market while still benefiting from the compounding effects of reinvested dividends.

Lundin

Lundin Mining (TSX:LUN) is another compelling stock to consider adding to an RRSP, even as the TSX hovers around all-time highs. One of the standout reasons is its impressive growth trajectory. The diversified base metals miner recently saw quarterly revenue growth of 84.1% year-over-year and a remarkable 105.7% increase in quarterly earnings. These figures highlight the company’s ability to thrive in a strong market. This makes it an attractive option for long-term investors looking to benefit from both capital appreciation and income.

Another reason LUN stands out is its solid financial foundation and dividend potential. With a forward annual dividend yield of 2.8% and a history of stable payouts, LUN offers a steady income stream – one that can enhance the growth of an RRSP over time. The company’s strong cash flow generation, with $1.4 billion in operating cash flow and a manageable debt-to-equity ratio of 24.6% further reinforce its position as a resilient and reliable investment. For investors looking to build a robust retirement portfolio, LUN’s combination of growth potential and income stability makes it a top contender.