The 3 Best Canadian Stocks to Buy and Hold Forever in an RRSP

The RRSP is one of the best ways to create long-term income, and these stocks can help you on the way.

Amy Legate-Wolfe

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. Before joining Motley Fool Canada, she 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. 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 January 23, 2025 9:15 pm EST

Investing in Canadian stocks for a Registered Retirement Savings Plan (RRSP) requires a mix of long-term planning, a focus on stability, and an eye for growth. An RRSP is designed to help you save for retirement while offering tax benefits, so your stock picks should align with these goals. When selecting stocks, consider factors like historical performance, dividend consistency, sector stability, and growth potential. Stocks like Fortis (TSX:FTS), Royal Bank of Canada (TSX:RY), and Waste Connections (TSX:WCN) stand out as strong options, each bringing unique qualities to the table.

Close up of an egg in a nest of twigs on grass with RRSP written on it symbolizing a RRSP contribution. — Source: Getty Images

Top stocks

Fortis is a go-to stock for those seeking reliability and steady dividends. As a utility company, Fortis thrives on its regulated earnings, making it less volatile than other sectors. Over the years, FTS has consistently raised its dividend, with a recent yield of 4%. In its most recent quarterly earnings (reported in late 2024), Fortis posted a 6.6% year-over-year increase in earnings, supported by robust cash flow and strategic investments in renewable energy. Its predictable business model and focus on sustainable infrastructure make it a perfect fit for risk-averse investors building their RRSP.

Royal Bank of Canada, the largest Canadian bank by market cap, is a quintessential blue-chip stock. It benefits from Canada’s stable financial system and its diversified revenue streams. In its latest earnings report, RBC revealed a 13% increase in revenue and a 16.2% growth in earnings year-over-year, reflecting its strong market position. The bank’s forward price/earnings (P/E) of 13.6 and a dividend yield of 3.2% suggest that it remains an attractive investment for both growth and income-focused investors. Moreover, RBC’s strategic expansion into wealth management and technology keeps it well-positioned for future growth.

Waste Connections may not be the first name that comes to mind for RRSPs, but its strong fundamentals make it a compelling choice. Specializing in waste management and recycling, the Canadian stock benefits from consistent demand regardless of economic conditions. In the last quarter, Waste Connections reported 13.3% year-over-year growth in revenue and an impressive 34.5% increase in earnings. Despite a relatively modest dividend yield of 0.69%, its high profitability and forward P/E of 23.4 indicate robust growth potential, ideal for long-term investors.

Working in your RRSP

One of the advantages of holding these stocks in an RRSP is the tax-deferred growth they provide. Dividends from Fortis and RBC can compound over time, and capital gains from Waste Connections’ growth won’t be taxed until withdrawal. This allows your investments to grow faster compared to those in taxable accounts.

Another factor to consider is diversification. Fortis offers stability through its focus on utilities, RBC represents financial services, and Waste Connections adds a unique edge with its environmental and waste management niche. Together, these create a balanced portfolio that can weather market volatility while providing steady returns. The forward-looking strategies of these companies also bode well for long-term RRSP growth. Fortis is heavily investing in renewable energy, aligning with global trends. RBC is leveraging technology to enhance its customer experience and reduce costs, while Waste Connections is poised to benefit from the increasing focus on sustainability.

Market conditions are another aspect to watch. Fortis’ lower beta of 0.23 ensures stability even in turbulent markets, while RBC and Waste Connections provide opportunities for growth as the economy expands. The dividend histories further highlight commitment to shareholder returns – an important consideration for RRSP investors seeking passive income. And, don’t overlook valuation. Fortis’ trailing P/E of 18.9, RBC’s forward P/E of 13.6, and Waste Connections’ 23.4 indicate fair pricing relative to growth prospects. While Waste Connections appears pricier, its high growth rate justifies the premium, particularly for long-term holders.

Bottom line

Fortis, RBC, and Waste Connections offer a blend of stability, income, and growth, perfectly suited for an RRSP. These Canadian stocks not only align with the conservative nature of retirement planning. But also promise solid returns over the long haul. By investing in such fundamentally strong Canadian stocks, you can ensure your RRSP becomes a robust vehicle for financial security in retirement.