Canadians can lessen their tax payables while saving for retirement through the Registered Retirement Savings Plan (RRSP). Since money invested in the account grows tax-free, the RRSP can put you on the right path to a financially secure future.
RRSP contributions are tax-deductible, but only income earners are eligible to open an account. For the income year 2025, the annual limit is 18% of earned income, not exceeding $32,490. When you file your tax return in 2026, you can deduct the RRSP contributions from your taxable income.
Eligible investments
A rewarding strategy is to hold income-producing assets in an RRSP, not cash. You want to maximize the tax-fee money growth feature. The qualified investments include bonds, mutual funds, government investment certificates (GICs), exchange-traded funds (ETFs), and stocks. However, you pay taxes on the funds you withdraw.
Dividend stocks are preferred holdings, and investors typically take the buy-and-hold approach. You can harness the power of compounding this way and build RRSP wealth. Reinvesting dividends and buying more shares results in a larger payout on the next distribution date. Thus, a modest investment can become serious wealth over time.
Appealing attributes
Though Freehold Royalties (TSX:FRU) operates in the volatile oil and gas industry, it has appealing attributes for RRSP investors. Besides the generous 8% dividend yield, the payout frequency is monthly. You can reinvest dividends 12 times a year, not four. As of this writing, FRU trades at $13.54 per share (+12% year-to-date).
The $2.2 billion company acquires and manages royalty interests in crude oil, natural gas, natural gas liquids, and potash properties. Freehold’s total land holdings in Canada are approximately 6.2 million gross acres. In the U.S., exposure is currently 1.1 million gross drilling acres and is growing.
Operators in the land include large-cap American and Canadian energy companies. They shoulder capital costs to drill, equip, and operate the wells for production, including maintenance. Freehold receives a percentage of the production. Exxon Mobil and Canadian Natural Resources are among the quality payors.
FRU has not missed a monthly dividend payment since January 1999. Starting September 2022, the regular monthly dividend was fixed at $0.09 per share.
Low-risk profile
Atrium Mortgage Investment Corporation (TSX:AI) is one of Canada’s largest alternative real estate lenders. The $562 million MIC commits to preserving its low-risk profile by maintaining a conservative residential, multi-residential, and commercial mortgage portfolio.
Like FRU, AI is a high-yield monthly income stock. At $11.80 per share, RRSP investors can partake in the 7.9% dividend. In the first half of 2025, net income increased 6.1% year-over-year to $25 million, while provisions for mortgage losses declined 72.1% to $2.3 million. The majority of the portfolio consists of conventional mortgages (75% or less loan-to-value).
The recent Bank of Canada rate cut could boost demand in the real estate market, but reduce the profitability of MICs. Nonetheless, Atrium has consistently paid monthly dividends since September 2012.
Comfortable future
The RRSP is an investment account that can provide Canadians with a comfortable future. You can build retirement wealth and realize sizeable tax savings during your million-dollar journey.
