Once you begin working and filing income taxes in Canada, you start accumulating contribution room for a Registered Retirement Savings Plan (RRSP).
For long-term investors, this account is one of the most powerful wealth-building tools available — not because of what you put into it, but because of how long your money is allowed to compound.
RRSP contributions reduce your taxable income today, while investments inside the account grow on a tax-deferred basis. That makes the RRSP ideal for assets designed to compound steadily over decades, such as high-quality stocks.
While withdrawals are generally taxable, programs like the Home Buyers’ Plan (HBP) and Lifelong Learning Plan (LLP) offer limited flexibility, reinforcing the idea that RRSPs are best reserved for long-term retirement goals.
Given that multi-decade time horizon, stocks — despite short-term volatility — have historically delivered the strongest real returns. The key is choosing businesses durable enough to survive economic cycles while continuing to grow cash flows. One TSX-listed company fits that bill particularly well.
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Why RRSPs reward patient stock investors
The biggest advantage of an RRSP isn’t just the tax deduction — it’s uninterrupted compounding. Dividends, distributions, and capital gains can be reinvested year after year without being eroded by annual taxes. Over decades, this difference can be enormous.
That makes RRSPs well-suited for companies that combine dependable income with long-term growth. Ideally, the business should generate predictable cash flows, have inflation protection, and possess opportunities to reinvest capital at attractive rates. Infrastructure assets often meet all three criteria.
A high-quality TSX infrastructure compounder
Brookfield Infrastructure Partners L.P. (TSX:BIP.UN) stands out as a stock that can be safely held in an RRSP for decades. It owns and operates essential infrastructure assets around the world, including utilities, transportation networks, energy infrastructure, and data-related assets. These assets tend to be regulated or contracted, providing stable and inflation-linked cash flows.
To be clear, Brookfield Infrastructure is not a low-risk utility. It operates globally, uses leverage, and continuously recycles capital by selling mature assets and reinvesting in higher-return opportunities. That strategy introduces execution risk, but it also fuels stronger long-term growth and offers a higher yield than traditional utilities.
At recent prices below $48 per unit, Brookfield Infrastructure offers a cash distribution yield of roughly 4.9%. Analyst consensus estimates imply the units trade at a discount of about 12% to intrinsic value, providing a reasonable entry point for long-term investors.
Growing income for retirement
Management targets annual funds from operations (FFO) per unit growth of more than 10%, driven by disciplined acquisitions, operational improvements, and capital recycling. This supports a long-term distribution growth target of 5–9% annually, while maintaining a sustainable payout ratio of 60–70% of FFO.
Over the past decade Brookfield Infrastructure has delivered distribution growth of approximately 7% annually over the past decade. Even assuming a conservative 5% growth rate going forward, today’s yield would rise to nearly 8% on cost in 10 years — an attractive income stream for retirement.
Long-term investors can further enhance returns by accumulating units during market pullbacks and reinvesting distributions during downturns, accelerating income growth through compounding.
Investor takeaway
Brookfield Infrastructure Partners offers a compelling blend of stable cash flows, inflation protection, and long-term growth — qualities that align perfectly with the RRSP’s multi-decade investment horizon.
For investors seeking another name to hold safely for decades in their RRSP while building growing retirement income, Brookfield Infrastructure deserves serious consideration.
