RRSP Investors: Should You Own Telus Corp (TSX:T) or Suncor Energy Inc (TSX:SU) for the Next 30 Years?

Suncor Energy Inc (TSX:SU)(NYSE:SU) and Telus Corporation (TSX:T)(NYSE:TU) are two of Canada’s top companies. Is one a better RRSP bet today?

| More on:

Canadian savers are using their self-directed RRSP accounts to hold top Canadian dividend stocks.

These companies are often expensive, but the recent pullback in the TSX Index has finally served up some attractive pricing on a number of the country’s best stocks.

Let’s take a look at two names that deserve to be on your RRSP radar today.

Suncor (TSX:SU)(NYSE:SU)

Suncor just announced that its current CEO, Steve Williams, will step aside in 2019. When such a large company has a change at the top, investors often take a step back to see what will happen with the new leader, but that shouldn’t be the case with Suncor. The current chief operating officer Mark Little will immediately become president and take over the CEO role next spring. The transition should be smooth, as Little knows the business very well.

Suncor reported solid Q3 2018 results, supported by production growth at newly completed projects, as well as additional output that has come with acquisitions. The company is best known for its oil production facilities, but it also owns large refineries and a network of more than 1,500 Petro-Canada retail locations.

The downstream businesses have benefited from lower input costs due to the drop in Western Canadian Select prices, while the production side saw higher margins from improved WTI and Brent pricing compared to Q3 last year.

A steep drop in oil prices has hit energy stocks in recent weeks, but the market could quickly bounce back in 2019, as U.S. sanctions against Iran impact global supply.

Suncor currently trades for $44 per share compared to the 2018 high near $55. The current dividend provides a yield of 3.25%, and investors should see a nice increase in the distribution next year. Suncor raised the payout by 12.5% in 2018.

Telus (TSX:T)(NYSE:TU)

Telus has passed the peak of a major capital program, and that should translate into more cash flow available for distributions to shareholders.

The company reported Q3 adjusted 2018 net income of $445 million compared to $417 million in the same period last year. Free cash flow increased 41% to $303 million.

Telus added nearly 200,000 new wireless, TV, and internet customers in the quarter, and the strong trend should continue, supported by recent investments and the expansion of the PureFibre rollout that is connecting homes and businesses to the fibre optic network.

Dividend growth is targeted at 7-10% for 2019, which is consistent with the past several years. The current payout provides a yield of 4.7%.

Is one attractive?

Suncor and Telus should both be solid buy-and-hold picks for RRSP investors. If you can handle a bit of volatility, Suncor looks quite oversold today and likely offers better divided-growth prospects in the medium term.

If you aren’t convinced oil has a bright future, Telus might be the way to go.

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 Andrew Walker has no position in any stock mentioned.

More on Dividend Stocks

Canadian dollars are printed
Dividend Stocks

Beat the TSX With This Cash-Gushing Dividend Stock

Toronto-Dominion Bank (TSX:TD) stock could do well in the year ahead.

Read more »

monthly desk calendar
Dividend Stocks

Monthly Income: Top Dividend Stocks to Buy in November

Here are two of the best monthly dividend stocks in Canada you can buy in November 2024 and hold for…

Read more »

profit rises over time
Dividend Stocks

These 2 Dow Stocks Are Set to Soar in 2025 and Beyond

Two Dow Jones stocks are screaming buys but Canadians must hold them in an RRSP or RRIF to avoid paying…

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

How to Use Your TFSA to Earn Ultimate Passive Income

If you have a TFSA, then you have the key to creating ultimate passive income. All you need is a…

Read more »

Confused person shrugging
Dividend Stocks

Better Buy: Fortis Stock or Hydro One Stock?

Let's do a compare and contrast of these two top utilities stocks right now, shall we?

Read more »

A close up color image of a small green plant sprouting out of a pile of Canadian dollar coins "loonies."
Dividend Stocks

Boost Your Passive Income: 2 Canadian High-Yielders at a Bargain

Nutrien (TSX:NTR) stock and another play that appear like fantastic dividend bargains in mid-November.

Read more »

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

TSX Stocks Soaring Higher With No Signs of Slowing

Three TSX stocks continue to beat the market and could soar higher in an improving investment landscape.

Read more »

Hourglass and stock price chart
Dividend Stocks

Goeasy Stock: Is It Heading for a 52-Week High?

Goeasy stock has been edging higher, especially after another record-setting earnings report. So are 52-week highs in sight?

Read more »