Volatility in the market can provide Canadian savers with opportunities to buy good TSX dividend stocks at discounted prices for a self-directed Registered Retirement Savings Plan (RRSP) portfolio focused on dividends and long-term total returns.
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Bank of Montreal
Bank of Montreal (TSX:BMO) is down about 8% in 2025. The stock has now given back a good chunk of the gains it racked up in the fourth quarter (Q4) of last year, providing investors who missed the rally with a chance to buy BMO on a sizeable pullback.
Bank of Montreal is currently Canada’s third-largest bank by market capitalization, with a valuation of around $92 billion. The bank provides investors with good exposure to the American economy through its BMO Harris Bank division, which has grown through a series of acquisitions going back to the 1980s. The most recent was Bank of Montreal’s US$$16.3 billion purchase of California-based Bank of the West in February 2023, which added more than 500 branches and 1.8 million customers while expanding the American business to 32 states.
The Bank of the West deal should provide decent long-term benefits for shareholders, although there have been some bumps to navigate in the past couple of years. Bank of Montreal negotiated the purchase in late 2021 at the peak of the post-pandemic rally in the banking sector. The acquisition closed in early 2023, right before a number of U.S. regional banks went bust, sending bank stocks into a tailspin. Rising interest rates in the United States put pressure on borrowers with too much debt in 2023, and this continued in 2024 until the central bank started to reduce rates. Bank of Montreal had to take large provisions for credit losses (PCL) on some accounts. This is why the stock price fell from close to $153 in early 2022 to $103 in late 2023 and then back to $110 again in 2024 after a nice rebound.
Looking ahead, interest rates in Canada and the U.S. will likely trend lower in the next year as long as tariffs don’t trigger a major spike in inflation. Investors who buy BMO stock at the current level can get a dividend yield of 5%. The board has paid a dividend every year for nearly two centuries.
Canadian Natural Resources
Canadian Natural Resources (TSX:CNQ) is Canada’s biggest oil and gas company, with a current market capitalization of nearly $83 billion. The stock is down about 25% in the past year due to weak oil prices. A US$6.5 billion acquisition the company made late last year has likely contributed to the slide in recent months as oil prices have fallen to levels not seen since the pandemic.
Analysts broadly expect the oil market to remain in a surplus situation into 2026, so there could be additional headwinds for oil producers, especially if a trade war between the United States and China pushes both economies into a recession.
That being said, contrarian investors might want to start nibbling on CNQ stock. The company says its West Texas Intermediate (WTI) breakeven price is about US$40 to US$45 per barrel. Oil trades near US$63 at the time of writing, so the company is still generating decent margins. The board raised the dividend twice in 2024 and again in 2025 to mark the 25th consecutive annual dividend increase.
Investors who buy CNQ stock at the current level can get a dividend yield of 6%.
The bottom line on top stocks for RRSP dividends
Bank of Montreal and CNRL pay good dividends that should continue to grow. If you have some cash to put to work in a self-directed RRSP, these stocks deserve to be on your radar.
