RRSP Investors: 2 TSX Dividend Stocks to Buy for 2025

These stocks should benefit as interest rates decline.

| More on:
Electricity transmission towers with orange glowing wires against night sky

Source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Canadian investors with self-directed Registered Retirement Savings Plan (RRSP) accounts are looking for TSX stocks that pay reliable dividends to add to their portfolios. Recent cuts to interest rates by the bank of Canada could provide an extra tailwind for dividend stocks heading into 2025.

Fortis

Fortis (TSX:FTS) is a good example of a dividend stock that should benefit as interest rates decline in Canada and the United States. The utility company uses debt to fund part of its growth program. A sharp jump in interest rates in 2022 and 2023 drove up borrowing costs, which is the main reason investors unloaded the stock as they worried that higher debt expenses would hurt profits and reduce cash which can be used for dividends.

Created with Highcharts 11.4.3Fortis PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

With interest rates now moving lower, Fortis should be able to borrow at more favourable rates. This will help the bottom line and can potentially enable the company to add more projects to the pipeline.

Fortis is already working on a $26 billion five-year capital program. The investments will raise the rate base from $38.8 billion in 2024 to $53 billion in 2029. As new assets go into service, there should be a steady boost to revenue and cash flow. This will help support planned dividend increases of 4% to 6% per year through 2029.

Fortis just raised the dividend by 4.2%, marking the 51st consecutive annual dividend increase from the company. Investors who buy the stock at the current price can get a dividend yield of 4%. There are other stocks that offer higher yields, but the annual dividend growth is tough to ignore, and each distribution hike increases the return on the initial investment.

Bank of Nova Scotia

Bank of Nova Scotia (TSX:BNS) underperformed its peers in recent years, but a turnaround plan launched by the new CEO could rekindle investor interest in the stock. The company is focusing its new growth investments primarily on the United States and Canada. Under previous management, Bank of Nova Scotia spent billions of dollars on acquisitions in Peru, Chile, and Colombia, as well as Mexico. The international businesses will remain part of the portfolio for the near future, but some could be monetized at some point with funds redirected at different opportunities.

Bank of Nova Scotia’s US$2.8 billion investment this year in a 14.9% stake in KeyCorp, a U.S. regional bank, is an example of the type of deals that could be on the horizon. The bank also recently created a new executive position to focus on growing Bank of Nova Scotia’s business in Quebec.

Bank of Nova Scotia trades near $72 at the time of writing. The stock is up about 27% in the past year, but still sits well below the $93 it reached in early 2022. Falling interest rates should lead to lower provisions for credit losses (PCL) in the coming quarters as borrowers with too much debt get a bit of a break on interest charges.

The turnaround plan will take time to deliver results. Investors, however, who buy BNS stock at the current level can get a dividend yield of 5.9% while they wait.

The bottom line on dividend stocks for RRSP investors

Fortis and Bank of Nova Scotia pay attractive dividends that should continue to grow. If you have some cash to put to work in a buy-and-hold portfolio targeting dividends and total returns these stocks deserve to be on your radar.

Should you invest $1,000 in Lightspeed right now?

Before you buy stock in Lightspeed, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Lightspeed wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

The Motley Fool recommends Bank pf Nova Scotia and Fortis. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker has no position in any stock mentioned.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

a person watches a downward arrow crash through the floor
Dividend Stocks

Is This Correction Your Chance? Top 4 Canadian Dividend Stocks on Sale

Stocks may be down, but now is your chance to get some of these top dividend stocks on sale.

Read more »

Confused person shrugging
Dividend Stocks

Where to Invest $2,500 in the TSX Today

These TSX stocks offer attractive dividends and a shot at decent upside on a rebound.

Read more »

Pile of Canadian dollar bills in various denominations
Dividend Stocks

Invest $25,000 in These Dividend Stocks for $1,956.66 in Annual Passive Income

Dividends stocks can make a huge difference, even if shares don't move an inch. And these might be the best.

Read more »

Pile of Canadian dollar bills in various denominations
Dividend Stocks

Got $5,000? 5 Income Stocks to Buy and Hold Forever

These income stocks have a solid dividend-payout history that can help you earn stress-free passive income.

Read more »

grow money, wealth build
Dividend Stocks

Why I’d Invest $10,000 in This Undervalued Dividend-Growth Stock for Decades of Income

This undervalued dividend stock offers a high yield of over 8% and can help you earn more than $200 in…

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

Here’s Exactly How a $20,000 TFSA Could Potentially Grow to $200,000

Index funds like the iShares S&P/TSX Capped Composite Index (TSX:XIC) are tax free in a TFSA.

Read more »

Dividend Stocks

How I’d Invest $6,000 in Canadian Real Estate Stocks to Build Lasting Wealth

Canadian REITs on sale! See how grocery-anchored retail properties offering 9% yields could turn $6,000 into lasting wealth despite US…

Read more »

rain rolls off a protective umbrella in a rainstorm
Dividend Stocks

Economic Headwinds: Should You Still Consider Buying the Dip?

A market dip might seem like a bumpy road, but it can be far smoother in the future with the…

Read more »