Is This the Next Generation of RRSP-Friendly Stocks?

Enerflex Ltd. (TSX:EFX) and its peers may take over from the old guard of defensive RRSP picks.

| More on:

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

Imagine that you – as a retirement investor – had to eschew the usual rote of stock selection based on branding, market cap, and hyperbole. If you were to stick to the usual defensive sectors of the TSX index but go for less obvious stocks to pad out an RRSP, what might those stocks be?

Below you will find three suitable stocks that fit the bill, spanning the Canadian energy and mining industries, and selected either for their defensive dividend, high expected growth, or a combination of these two characteristics. Let’s see which of these potentially sidelined tickers could benefit you financially further down the road.

Enerflex (TSX:EFX)

Edging out other big name oil and gas stocks on the TSX index is this healthy energy ticker that saw a one-year past earnings growth of 281%. With competitive valuation indicated by a P/E ratio of 15.5 times earnings and P/B of 1.2 times book, Enerflex carries an acceptable level of debt at 35.5% of its net worth and pays a moderate dividend yield of 2.51%.

Down 3.85% in the last five days, Enerflex feels somewhat neglected at the moment, which might suggest that last minute RRSP investors could be overlooking the solid all-rounder. However, with a 15.3% expected annual growth in earnings on the way, retirement investors looking for exposure to the energy industry may want to get invested.

Wesdome Gold Mines (TSX:WDO)

Despite being down 4.51% in the last five days, Wesdome Gold Mines is still overvalued, with a P/E of 56.1 times earnings and P/B of 4.3 times book. While this miner does not pay dividends at this stage, its ability to outperform the industry – see a one-year past earnings growth of 237.2% and five-year average of 47.3% – show that it’s a good capital gains play.

Vermilion Energy (TSX:VET)(NYSE:VET)

Down 2.57% in the last five days and with a one-year past earnings loss of -186.9%, investors might look askance at the stats for Vermilion Energy. Yes, that five-year average loss of -45.2% and fairly high level of debt at 73.8% of net worth could further compound the cons of buying this stock.

However, a dividend yield of 8.86% coupled with a 115.8% expected annual growth in earnings may make you change your mind. Once Vermilion Energy has a better track record, the stock is likely to become a firm favourite of RRSP and TFSA investors. With all three components in place (a tasty dividend, growth in earnings, and a decent track record under its belt) this could become a stock to rival the largest of Canadian energy tickers.

The bottom line

While a negative five-year earnings average of -6.7% lets Enerflex down somewhat, it’s a good contender for an RRSP based on its other stats. Wesdome Gold Mines’ clean balance sheet (see a low debt level of 5.5% of net worth) and high growth (a 61.3% expected annual growth in earnings is on the way) make for a strong capital gains stock. Vermilion Energy is definitely one to watch for an improvement, but could prove to be a popular choice should it make good on its growth in earnings.

Should you invest $1,000 in Vermilion Energy right now?

Before you buy stock in Vermilion Energy, 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 Vermilion Energy 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 Victoria Hetherington has no position in any of the stocks mentioned. Enerflex is a recommendation of Stock Advisor Canada.

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

calculate and analyze stock
Dividend Stocks

Here’s How Many Shares of Brookfield Renewable You Should Own to Get $500 in Quarterly Dividends

If you want some dividends on deck, then consider this energy producer, which could provide that and more.

Read more »

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

Here’s Exactly How $15,000 in a TFSA Could Grow Into $215,000

If you're looking to grow your $15,000 investment into $200,000, here's exactly how to get it done.

Read more »

A worker gives a business presentation.
Dividend Stocks

Navigating Economic Headwinds and Buying the Dip

If you're looking to get in on the markets, but fearful of the market dip, then here's how to navigate…

Read more »

Canadian Dollars bills
Dividend Stocks

A 10% Dividend Stock Paying Cash Every Month

This dividend stock doesn't only offer a massive income, but a variety of investments during this volatile period.

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

Income-generating Stocks That Could Accelerate Your TFSA Growth in 2025

Generate tax-free passive income in your TFSA with these two stocks and grow your wealth.

Read more »

woman looks out at horizon
Dividend Stocks

How I’d Invest $8,500 in Canadian Financial Services to Create a Wealth Legacy

Canada’s financial services sector can help you create a wealth legacy from a less than $10,000 investment.

Read more »

Person holding a smartphone with a stock chart on screen
Dividend Stocks

Is BCE Stock a Buy for its Dividend Yield?

BCE stock looks pretty appealing with a 12% dividend yield, but there's more to consider.

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

TFSA: Invest $15,000 in This TSX Stock and Create $962.55 in Annual Passive Income

If there's one TSX stock to buy right now, it's this long-term hold that's been around for over 100 years!

Read more »