3 Dividend Stocks for Your RRSP: Telus Corporation, Suncor Energy Inc., and Royal Bank of Canada

Telus Corporation (TSX:T)(NYSE:TU), Suncor Energy Inc. (TSX:SU)(NYSE:SU), and Royal Bank of Canada (TSX:RY)(NYSE:RY) all deserve a spot in your RRSP. Here’s why.

| More on:
The Motley Fool

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

One of the biggest myths about registered retirement savings plans, or RRSPs, is that you should only keep fixed income investments in them.

The argument goes that because interest is highly taxed, you should keep fixed income investments inside registered accounts instead of stocks. But there’s one flaw in this approach: it ignores the rate of return.

When yields were much higher, sheltering interest income made sense. However, with rates near all-time lows, you’re not keeping much money from the revenue man by holding bonds inside your RRSP. In fact, you could save more money by holding equities in registered accounts instead.

Of course, everyone’s tax situation is different. You should discuss this with a professional to determine what’s best for you. But contrary to the old rule of thumb, sheltering your dividend stocks can be a smart strategy. So if the numbers make sense for you, here are three dividend stocks to stuff inside your RRSP.

1. Royal Bank of Canada

When I try to sell friends on the benefits of dividend growth investing, I like to point to the Royal Bank of Canada (TSX: RY)(NYSE: RY). Over the past 20 years, the company has raised its dividend at a 10% compounded annual clip. The past three years have been even better, with an annualized dividend growth rate of 12%.

If you had bought 100 shares of Royal at the start of 1995 and never made another purchase, you would have 400 shares today thanks to stock splits. What’s more, the yield on your original investment would be more than 40%. Those numbers would look even better if you had enrolled in the company’s dividend reinvestment plan.

It’s really simple. We want to buy businesses that can deliver big dividend hikes. With many companies phasing out pension plans, a portfolio of dividend growth stocks like the Royal Bank can provide steady income in retirement.

2. Telus Corporation

Telus Corporation (TSX: T)(NYSE: TU) has paid a dividend every year since 1916. But I don’t want you to think that this is some stodgy company. Telus is also one of the best dividend growth stocks in the country.

The latest bump was announced on November 6. The new quarterly dividend of 40 cents per share represents an increase of 11.1% year-over-year. And it’s just getting started.

Last year, Telus pledged to hike its dividend twice a year through 2016. Of course, future dividend increases will depend on the company’s earnings. But management would not have raised investors’ hopes unless they were confident they could deliver.

3. Suncor Energy Inc.

When Suncor Energy Inc (TSX: SU)(NYSE: SU) CEO Steve Williams was asked about his main goal as head of the oil giant, he said he wanted to line shareholders’ pockets with dividend cheques until they burst!

OK, maybe he didn’t say that. But judging by his actions, that seems to be his intent. Since taking over at Suncor in 2011, he has more than doubled the size of the company’s dividend and repurchased over 10% of its outstanding shares.

More distribution hikes are almost certainly on the way given Suncor’s growing oil sands production. No wonder this stock has attracted the attention of Warren Buffett.

Should you invest $1,000 in The Bank of Nova Scotia right now?

Before you buy stock in The Bank of Nova Scotia, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and The Bank of Nova Scotia wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Robert Baillieul has no position in any stocks mentioned.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

monthly desk calendar
Dividend Stocks

How I’d Invest $7,000 in These 2 Stocks Paying Monthly Dividends

Income-focused investors can consider taking positions in two dividend stocks that pay well-protected monthly dividends.

Read more »

Person holds banknotes of Canadian dollars
Dividend Stocks

A 5.36% Dividend Stock Paying Cash Every Single Month

This monthly dividend stock could be your next big money maker.

Read more »

3 colorful arrows racing straight up on a black background.
Dividend Stocks

Meet the Canadian Stock That Continues to Crush the Market

This Canadian stock has already been crushing the market, but watch out. More could be on the way.

Read more »

Dividend Stocks

Where to Invest $5,000 in Canadian Stocks in Today’s Market

These stocks pay attractive dividends and should be solid long-term picks.

Read more »

Dividend Stocks

Where I’d Invest $10,000 in 2 No-Brainer Canadian Stocks Under $70

The stock market is in a state of flux right now, and it’s important to be careful where you invest…

Read more »

Man data analyze
Dividend Stocks

Trump’s Tariff Relief: China Gains, But What About Canada?

Trump Tariffs create uncertainty, but index funds like iShares S&P/TSX Capped Composite Index Fund (TSX:XIC) remain investable.

Read more »

ways to boost income
Dividend Stocks

This 7.6% Dividend Stock Pays Cash Every Month

There are dividend stocks, there are monthly dividend stocks, and then there are those with incredibly stable futures.

Read more »

Close up of an egg in a nest of twigs on grass with RRSP written on it symbolizing a RRSP contribution.
Dividend Stocks

3 Canadian Dividend Stocks to Build Wealth in Your RRSP

Three Canadian dividend stocks can help you build wealth or a substantial retirement fund in your RRSP.

Read more »