Canadian savers are searching for top TSX stocks to add to their self-directed Registered Retirement Savings Plan (RRSP) portfolios focused on dividends and total returns.
Buying good companies when they are out of favour takes courage, but you get better dividend yields and have a chance at generating decent capital gains on a rebound.
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Bank of Montreal
Bank of Montreal (TSX:BMO) trades near $134 per share at the time of writing compared to $150 in March. The dip gives investors a chance to buy BMO stock at a nice discount while picking up a solid 4.7% dividend yield. The bank has paid investors a share of the profits every year for nearly two centuries.
Bank of Montreal steadily expanded its American presence through a series of strategic acquisitions over the past 40 years. The company’s US$16.3 billion purchase of California-based Bank of the West in 2023 added 500 branches and 1.8 million new customers and extended BMO’s presence to 32 American states. High interest rates put some large clients of the bank in a rough spot in 2023 and 2024, forcing Bank of Montreal to book increased provisions for credit losses (PCL). The worst should be over, however, and the U.S. market remains attractive over the long haul.
Canadian Natural Resources
Falling oil prices led to a material pullback in the share price of Canadian Natural Resources (TSX:CNQ) over the past year. The stock currently trades near $40 compared to $53 last May. Near-term weakness in the oil market is expected due to the risk of a global recession and rising production. An economic slowdown in the United States and China will likely reduce oil consumption in the world’s two largest energy markets.
That being said, CNRL says its West Texas Intermediate (WTI) breakeven price is US$40 to US$45 per barrel. WTI currently trades near US$58 per barrel, so CNRL is still generating decent margins. At some point, the trade deals will all get sorted out, and economic growth will ramp up again in China and the United States. When that happens, oil prices should recover and CNRL’s share price should move higher with the overall energy sector.
CNRL is also a major natural gas producer. Domestic and international demand for natural gas is expected to rise in the coming years as hundreds of gas-fired power facilities are built to provide electricity for artificial intelligence data centres. New liquified natural gas (LNG) facilities being built on the coast of British Columbia will give CNRL access to international buyers.
CNRL raised the dividend twice in 2024 and has already increased the payout again in 2025. This is the 25th consecutive year of dividend hikes. Investors who buy CNQ stock at the current level can get a dividend yield of 5.9%.
The bottom line on top TSX stocks for an RRSP
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.
