Future retirees are financially vulnerable if retirement planning is not a priority. The terrifying thing about retirement is that it can last longer than you think. It is precisely why the federal government introduced the Registered Retirement Savings Plan (RRSP) in 1957.
RRSP framers wanted to promote savings or encourage Canadians to save through a tax-deferred savings plan. Because you can hold income-producing assets like stocks in the account, there’s a path to secure your financial security in retirement. Today, three Canadian dividend stocks are wealth-builders if you’re using the RRSP to save and invest for retirement.
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Telco giant
Good cash flow is what future retirees desire, especially in the current environment. BCE (TSX: BCE), the most dominant player in Canada’s telecommunications sector, is a cash cow. Based on company records, the $30 billion telco giant has consistently paid quarterly dividends in the last 41 years (1983-2024).
At $30.03 per share, the current dividend yield is 13.48%. Assuming the yield remains constant, a $32,940 investment will balloon to $466,966 in 20 years. The investment amount in the example is the maximum RRSP contribution limit for the tax year 2025.
In the fourth quarter (Q4) of 2024, BCE’s net earnings increased 16% to $505 million versus Q4 2023, although adjusted net earnings for the year declined 5.2% year over year to $2.77 billion. According to management, BCE is undergoing transformation and driving costs lower amid the hyper-competitive communications market.
Curtis Millen, chief financial officer of BCE and Bell Canada, said, “Overall, we remain confident in our ability to execute under any circumstances and to deliver value for our shareholders.”
Dividend grower
Canadian Natural Resources Limited (TSX: CNQ) is a no-brainer choice for its reliable dividend payments and growth. This top-tier energy stock has raised dividends for 25 consecutive years. If you invest today for your RRSP, the share price is $37.99, while the dividend offer is 6.23% ($2.37 annual dividend per share).
The $94 billion senior crude oil and natural gas production company operates in Western Canada, the U.K. portion of the North Sea, and Offshore Africa. Its president, Scott Stauth, said, “2024 was an excellent year for us, as we achieved strong growth and set several new production records from our base operations before including acquisitions that closed in 2024.”
Besides the recent 4% hike to its quarterly dividend, CNQ commits to allocating 60% of free cash flow (FCF) to shareholder returns and 40% to the balance sheet until net debt reaches $15 billion.
Portfolio stabilizer
Emera (TSX: EMA) is nice to have as a stabilizer in an RRSP stock portfolio. In addition to the regulated business model, the utility stock’s dividend-growth streak is 18 years. At $59.35 per share, current investors enjoy a market-beating +11.93% year-to-date gain on top of the 4.92% dividend yield.
The $17.55 billion Canadian multinational energy holding company owns a portfolio of high-quality utilities. Scott Balfour, president and chief executive officer of Emera, said, “In 2025, our focus will be on executing on our largest ever five-year $20 billion capital plan.” The grid modernization and infrastructure expansion should result in earnings growth and cash flow for shareholders.
Salient features
The two salient features of the RRSP are tax-deductible contributions and tax-deferred money growth. Using this investment account will give you a better chance of a comfortable retirement.
