Canadian investors looking to build out solid retirement portfolios utilizing a Registered Retirement Savings Plan (RRSP) certainly have plenty of options.
For those looking to build such a portfolio with individual stocks as opposed to ETFs, the good news is that there are plenty of blue-chip dividend stocks to choose from.
In this article, I’m going to highlight three I think provide the kind of upside long-term investors looking to put capital away for retirement should want.
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Bank of Nova Scotia
In the world of Canadian banking stocks, Bank of Nova Scotia (TSX: BNS) remains one of the premier options I think is worth considering right now.
Scotiabank has remained one of the most compelling dividend stocks for a long time, and that’s not simply due to this company’s current dividend yield of 5.8%. Rather, it’s Scotiabank’s ability to continue to raise its dividend as earnings rise. Add on the fact that Canada’s banking sector has historically remained very stable, and there’s a clear and easy-to-understand investing thesis here.
With a higher yield overall than that of most of its peers and a dividend payout ratio that appears to remain sustainable, Scotiabank still looks like a solid buying opportunity, even after its recent rise.
With strong client relationships, improving capital ratios, and continued share buybacks on top of this dividend yield, investors have a lot to like about owning this gem over the long haul.
Fortis
I’ve long pounded the table on Canadian utility giant Fortis (TSX: FTS), and that’s certainly been the right call of late.
Looking at the stock chart above, Fortis has continued to blow away most investor expectations, considering the typical slow-and-steady nature of this company. Operating in a boring business (everything’s relative) can be a negative during boom times. But with more attention being paid to the need for efficient and reliable energy delivery in the age of AI, Fortis has continued to see its multiple expand.
Now, it’s entirely possible Fortis could see its multiple contract from here. But until the company’s earnings growth (which came in at 14% year-over-year this past quarter) slows, this is a dividend aristocrat I think has more upside over the long term. With more than 50 consecutive years of dividend increases, and a payout ratio that stands at around 75%, this is a stock to buy and hold long term in my view.
Enbridge
In the energy infrastructure sector, Enbridge (TSX: ENB) continues to be my top pick.
The reality is that over the long term, we’re going to need more energy, not less. That’s a very simplistic thesis to live by, but it’s one that’s made many investors a lot of money.
And given all the geopolitical turmoil of late, the discussion around energy independence hasn’t been this fierce in some time. With that said, Enbridge’s core pipelines, which deliver crude oil from Canada’s oil sands to refineries mainly in the U.S. Midwest, should continue to operate near maximum capacity as we see steady economic growth in North America.
With a whopping dividend yield of more than 6%, Enbridge remains the winner in this regard in terms of up-front yield. But notably, this yield has come down as Enbridge’s stock price has risen of late – a trend I think should continue, as investors increasingly realize this company’s intrinsic value.
