Should you invest $1,000 in Rf Capital right now?

Before you buy stock in Rf Capital, 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 Rf Capital 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 $21,345.77!*

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 24 percentage points since 2013*.

See the Top Stocks * Returns as of 4/21/25

How to Retire Early

Here’s how owning top dividend stocks such as Royal Bank of Canada (TSX:RY)(NYSE:RY) can help you meet your early retirement goal.

| More on:

When should you retire?

The question is more common today than it might have been in the past. People are living longer, and that is resulting in governments trying to persuade their citizens to continue working later in life. Retiring at 65 used to be the top end of the working age, with many people exiting the workforce at 60, depending on their financial situation and their company pension plan.

Employees who love their jobs might be happy to work until they are 70, or later. For those of us who would prefer to spend our time on other pursuits, punching the clock for the last time in our fifties would be ideal.

Retiring early requires careful financial planning due to the way company pensions and CPP are paid out. Defined-benefit pensions that have a target retirement date of 65, for example, might allow you to retire earlier, but the payout drops. Taking CPP at 60 instead of 65 will also result in a significant cut.

The trick to retiring early is to have enough income coming from other investments to get you to 65 when you can tap the full value of CPP, the company pension, and OAS.

One way to do this is to start drawing down your RRSP early. The reason for this is that RRSP withdrawals are taxed, so you want to be in the lowest possible tax bracket when you remove the funds.

How much money do you need?

Let’s say you will receive a total of $35,000 per year at age 65 from the government and company pensions and that is adequate to cover your living expenses. If you want to retire at 55, you would need enough RRSP savings to cover you for 10 years. This would mean the RRSP fund would need to be about $350,000, assuming you do not get any return on the savings.

One way to build the RRSP portfolio to meet that goal is to buy top-quality dividend stocks and invest the distributions in new shares. This sets off a compounding process that can turn reasonably small initial investments into a large nest egg. The best companies to buy tend to be market leaders with strong track records of revenue and earnings growth to support rising dividends.

Royal Bank of Canada (TSX:RY)(NYSE:RY) is a good example. The bank is Canada’s largest company with a market capitalization of more than $150 billion. Royal Bank generated $12.4 billion in profit in fiscal 2018 and expects earnings per share to grow 7-10% per year. Dividends should continue to rise at that pace. The current payout provides a yield of 3.9%.

The company is investing heavily in digital solutions to keep up with changes in the financial industry and should remain competitive.

A $30,000 investment in Royal Bank just 20 years ago would be worth more than $360,000 today with the dividends reinvested.

The bottom line

Early retirement might seem like a dream, but it can become reality with some careful planning. Royal Bank is just one name among a number of top Canadian stocks to choose from when building a self-directed RRSP portfolio.

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

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

TFSA Investors: 2 TSX Stocks to Buy for Dividend Income

These stocks have increased their dividends every year for decades.

Read more »

exchange traded funds
Dividend Stocks

2 Rock-Solid Canadian ETFs to Safeguard Your Portfolio During Trump’s 90-Day Tariff Pause

BMO Low Volatility Canadian Equity ETF (TSX:ZLB) and another ETF were built for tougher market sledding.

Read more »

people relax on mountain ledge
Dividend Stocks

3 TSX Dividend Stocks to Buy for TFSA Passive Income

These stocks trade at reasonable prices and offer high dividend yields.

Read more »

Paper Canadian currency of various denominations
Dividend Stocks

The Smartest Canadian Stock to Buy With $250 Right Now

Analysts are super excited about this Canadian stock, so let's get into why.

Read more »

chart reflected in eyeglass lenses
Dividend Stocks

1 Top TSX Stock Down 18% to Buy and Hold For Decades

TD picked up a nice tailwind to start 2025. Are more gains on the way?

Read more »

Forklift in a warehouse
Dividend Stocks

9.5% Dividend Yield! I’m Buying This TSX Stock and Holding for Decades

Looking for a dividend stock that's ready to stand the test of time? Then consider this top notch option.

Read more »

investor looks at volatility chart
Dividend Stocks

A 8.9% Dividend Stock Paying Cash Every Month: Perfect in a Volatile Market

There are few real estate stocks that offer the stability and growth as this top dividend stock.

Read more »

An investor uses a tablet
Dividend Stocks

1 Undervalued TSX Stock Down 43% to Buy and Hold

Cenovus stock might be down, but don't count out this top energy stock, especially with a juicy dividend.

Read more »