2 Discounted Dividend Stocks for Your RRSP

Build a nest egg in your RRSP today without the hindrance of taxes. Consider quality and discounted dividend stocks such as Brookfield Property Partners LP (TSX:BPY.UN)(NYSE:BPY) and another company today.

| More on:

Registered Retirement Savings Accounts (RRSPs) are great for investing for your retirement because contributing to RRSPs reduces your income taxes for the tax year, so the higher tax bracket you’re at, the more taxes you’ll save when you contribute to your RRSP. Furthermore, what’s earned inside remains tax free until it’s withdrawn.

Here are two quality discounted dividend companies to consider for your RRSP.

Brookfield Property Partners LP (TSX:BPY.UN)(NYSE:BPY) owns, operates, and invests in quality commercial properties around the world. Its portfolio consists primarily of core office and retail assets (about 85%) and opportunistic assets (about 15%).

It targets total returns of 12-15% for its core portfolio and total returns of 20% for its opportunistic portfolio, which consists of assets across the multifamily, industrial, hospitality, triple net lease, and self-storage sectors.

Brookfield Property’s 4.7% yield is supported by stable cash flows generated by its diversified portfolio across the United States, Canada, Brazil, the United Kingdom, Europe, Australia, China, and India.

At about $31 per unit, Brookfield Property trades at a discount of roughly 20% from its IFRS value. Additionally, the company aims to increase its funds from operations per unit by 8-11% per year, while increasing its distribution by 5-8% per year. So, Brookfield Property is a good candidate for both total return and income investors.

(* – the original version of this post provided some potentially misleading tax related information which has been removed)

Gilead Sciences, Inc. (NASDAQ:GILD) develops and commercializes therapies to treat life-threatening diseases such as HIV, Hepatitis B, and Hepatitis C. Gilead Sciences has operations in more than 30 countries around the world.

At US$85.50 per share, Gilead Sciences trades at a cheap multiple of seven. The main reason it’s trading at a big discount is because the market can’t see clear growth in the near term. For example, its EPS are estimated to grow about 3% per year in the next three to five years.

That said, investors who have a long-term view can consider Gilead Sciences’s quality shares today because they’re cheap. Gilead Sciences has a top-notch S&P credit rating of A.

Other factors that make Gilead Sciences attractive include the fact that it started paying a dividend last year and its payout ratio is very low. This year it hiked its dividend by 9.3%.

Even if it decides to increase its dividend by 9% every year through 2020, its payout ratio would still be below 19%, assuming EPS growth of 3% every year.

In any case, with a payout ratio of about 16%, investors can expect Gilead Sciences to grow its dividend for many years to come.

Conclusion

Investors can consider Brookfield Property and Gilead Sciences for a better chance of higher returns than the market due to their discounted shares and the likelihood of growing income. Brookfield Property also offers a decent 4.7% yield to start.

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 Kay Ng owns shares of Brookfield Property Partners and Gilead Sciences. The Motley Fool owns shares of Gilead Sciences. Gilead Sciences is a recommendation of Stock Advisor Canada.

More on Dividend Stocks

Train cars pass over trestle bridge in the mountains
Dividend Stocks

Is CNR Stock a Buy, Sell, or Hold for 2025?

Can CNR stock continue its long-term outperformance into 2025 and beyond? Let's explore whether now is a good time to…

Read more »

coins jump into piggy bank
Dividend Stocks

The Smartest Dividend Stocks to Buy With $500 Right Now

These top dividend stocks both offer attractive yields and trade off their highs, making them two of the best to…

Read more »

Middle aged man drinks coffee
Dividend Stocks

Here’s the Average TFSA Balance at Age 35 in Canada

At age 35, it might not seem like you need to be thinking about your future cash flow. But ideally,…

Read more »

ETF stands for Exchange Traded Fund
Dividend Stocks

How to Invest Your $7,000 TFSA Contribution in 2024

Here's how I would prioritize a $7,000 TFSA contribution for growth and income.

Read more »

a man relaxes with his feet on a pile of books
Dividend Stocks

CPP Pensioners: Watch for These Important Updates

The CPP is an excellent tool for retirees, but be sure to stay on top of important updates like these.

Read more »

Technology
Dividend Stocks

TFSA Investors: 3 Dividend Stocks I’d Buy and Hold Forever

These TSX dividend stocks are likely to help TFSA investors earn steady and growing passive income for decades.

Read more »

four people hold happy emoji masks
Dividend Stocks

Love Dividend Growth? Check Out These 2 Income-Boosting Stocks

National Bank of Canada (TSX:NA) and another Canadian dividend-growth stock are looking like a bargain going into December 2024.

Read more »

An investor uses a tablet
Dividend Stocks

A Dividend Giant I’d Buy Over Enbridge Stock Right Now

Enbridge stock may seem like the best of the best in terms of dividends, but honestly this one is far…

Read more »