The Registered Retirement Savings Plan (RRSP) deadline for making contributions to claim on the 2024 tax return is March 3, 2025.
Canadian investors are wondering which TSX stocks might be good to buy right now for a self-directed RRSP portfolio focused on dividends and total returns.
RRSP investing strategy
One popular RRSP strategy involves buying top dividend-growth stocks and using the distributions to acquire new shares. This sets off a compounding process that can turn modest initial investments into significant savings over the course of two or three decades.
Market pullbacks enable the dividends to buy more stock. Good TSX dividend-growth stocks usually rebound from corrections and eventually hit new highs. In the current market conditions, it makes sense to look for stocks that have long track records of dividend growth supported by rising revenue.
Fortis
Fortis (TSX:FTS) is one of those stocks that investors can buy inside a self-directed RRSP and simply let sit in the portfolio for decades.
The company owns utility assets in Canada, the United States, and the Caribbean, including natural gas distribution utilities, power generation facilities, and electricity transmission networks. Most of the revenue comes from rate-regulated businesses. This means cash flow is usually predictable and reliable.
Fortis is currently working on a $26 billion capital program that will increase the rate base from $38.8 billion in 2024 to $53 billion in 2029. Additional projects are under consideration and will be added to extend the outlook. Fortis also has a history of making strategic acquisitions to boost growth. As interest rates decline, a new wave of consolidation in the utility sector could be on the way.
Fortis intends to raise the dividend by at least 4% annually through 2029. The board has increased the payout for 51 consecutive years.
Investors who buy Fortis at the current price can get a dividend yield of 4.1%. The dividend-reinvestment plan (DRIP) provides a 2% discount on new shares purchased using the DRIP.
Enbridge
Enbridge (TSX:ENB) is another natural gas utility company. In fact, Enbridge is now the largest natural gas utility operator in North America after completing its US$14 billion acquisition of three natural gas utilities in the United States in 2024.
These purchases are part of a multi-year strategy shift to diversify the assets. Enbridge is best known for its oil and natural gas pipeline infrastructure. In recent years, however, Enbridge bought an oil export terminal in Texas and took a stake in the Woodfibre liquified natural gas (LNG) export facility that was being built in British Columbia. In addition, Enbridge is expanding its solar and wind portfolio.
Enbridge has a $27 billion capital program on the go to drive revenue expansion. The cash flow from these assets and the newly acquired businesses should support steady dividend increases. Enbridge raised the payout in each of the past 30 years.
The bottom line on top TSX dividend stocks
Fortis and Enbridge are good examples of top Canadian dividend stocks with long track records of dividend growth. If you have some cash to put to work in a self-directed RRSP, these stocks deserve to be on your radar.
