The Registered Retirement Savings Plan (RRSP) is an ideal registered plan for long-term retirement savings. In your high-income earning years, you can contribute to the account and receive a nice income tax rebate. When you retire, you can withdraw from the fund, hopefully when your income tax rate is much lower.
Often the RRSP is forgotten when compared to the Tax-Free Savings Account (TFSA). Yet, it is an important part of an overall tax minimization strategy.
If you are looking for some stocks that could safely fuel your retirement savings, these two dividend stocks are a great fit.
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AltaGas: A perfect RRSP stock
AltaGas (TSX: ALA) is the ideal stock for an RRSP because it has an ideal combination of low-risk growth. This company is a hybrid of an American regulated gas utility and a Canadian end-to-end midstream business.
The utility is stable, but actually growing by an above average rate (around 8% per year). The midstream business is enjoying a surge in Asian demand for propane and other liquified petroleum gases.
AltaGas just delivered a stunning quarter where revenues increased 19% to $818 million and normalized earnings per share (EPS) increased 16% to $1.33. Right now, guidance is expected to hit the top of its year-end guidance target. However, if the Middle East conflict persists (and energy prices remain elevated), it could easily exceed those targets in 2026.
AltaGas has raised its dividend per share by a 6% compounded annual growth rate (CAGR) over the past five years. It is aiming for 5–7% dividend growth CAGR for the coming five years.
Given its balance sheet is under its normal debt range, it may be able to invest in more growth or just raise its dividend at the higher end of its target. It yields 2.6% today.
Canadian Natural Resources: A legend to hold in your RRSP
Canadian Natural Resources (TSX: CNQ) is another perfect dividend stock for an RRSP. While it is an energy stock (which can be volatile based on the price of energy commodities), it operates at a different level from other producers. It produces 1.million barrels of oil equivalent per day!
No other producer comes close. While it is the largest energy producer in Canada, it is also one of the most efficient. Its oil sands mining cost of production is only $23.73 per barrel!
With oil prices over $75 per barrel, it is gushing cash flow. In its recent quarter, it generated adjusted fund flows of $4.4 billion. Of that, it returned $1.5 billion back to shareholders in the form of $300 million in share buybacks and $1.2 billion of dividends.
It turns out its post-COVID-19 consolidation of the Alberta oil sand assets was a major home-run decision. As Canadian Natural de-levers from those acquisitions, shareholders will eventually see 100% of its free cash flow returned to shareholders. Given elevated energy prices, it is likely to hit its $13 billion debt target by the end of the year.
Canadian Natural yields 4.1% today. It has a 26-year history of growing its dividend by a 20% CAGR. Chances are very good that it will continue to pay a growing stream of dividends in the future (maybe even some special dividends along the way). This is a perfect stock to hold indefinitely in your RRSP.
