RRSP Investors: 3 Game-Changing Stocks for Your Retirement Portfolio

When you are saving for your retirement, you look for different “traits” in stocks than you would for stocks that you choose for short-term growth.

| More on:

Even though you can move around your RRSP stocks nearly the same way you do with your TFSA stocks, the choices should be more long term in one compared to the other. The reason is that since you can’t pull your returns out of the account till you are retired, which might be decades away, you might as well go for a longer “accumulation” of capital growth or dividends and leverage the power of time as much as you can.

For that, you need consistent stocks that you can buy and hold for decades.

A high-yield dividend stock

Accumulating cash in an RRSP, while a bit different from cash in a TFSA, which you can access whenever you want, can provide an important opportunity. It can be used to buy other assets and grow your RRSP portfolio. A high-yield and undervalued stock like Slate Office REIT (TSX:SOT.UN) might be ideal for this particular usage.

The REIT is currently offering a mouth-watering yield of 7.4% and is trading at a price-to-earnings ratio of 8.3 and a price-to-book ratio of just 0.6 times. The payout ratio is healthy at 60.5%, and even though revenues took a steep dive in 2020, the REIT might be able to turn things around in 2021. With $20,000 invested in the company, you can accumulate $1,480 a year — a decent enough sum for investing.

A growth stock

Clairvest (TSX:CVG) is a Toronto-based capital market company that has been growing quite steadily for the past decade, and it is trading at a decent discount. The company has a 10-year CAGR of 18.5%, and if the company can sustain it for one or two more decades, it can be game-changing for your RRSP portfolio. The firm has helped its clients (investment) create over $2 billion of net worth over the years.

The company has made over 320 add-on acquisitions and 56 partnership investments. It has a diversified portfolio of assets to its name. The financials are a bit inconsistent, but the company has a powerfully strong balance sheet, almost no debt, and a strong cash position. It also offers dividends, but the yield is merely 0.15%.

A powerful combination

One stock that offers both decent growth and sizeable dividends is Summit Industrial Income REIT (TSX:SMU.UN). It’s currently offering a yield of 3.1% and a powerful 10-year CAGR of 34.29%. It might not be sustainable, but if the company can keep it up for just a little while longer, it can double your capital in fewer than three years.

It has a geographically diversified portfolio of light industrial properties in five provinces, though the bulk of its assets are concentrated in three (Ontario, Alberta, and Quebec). Its true growth potential comes from the “uses” its properties offer — i.e., warehousing, logistics, customer support, shipping, light assembly, etc., all of which make it an ideal e-commerce player.

Foolish takeaway

It’s a good idea to add both growth and dividends to your RRSP portfolio if you want your retirement assets to be relatively well balanced. If your dividend stocks stay consistent for decades, you can turn them into income-producing streams by reinvesting the returns back to them. And your growth stocks can help you reach your retirement net worth goal sooner.

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 Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends SUMMIT INDUSTRIAL INCOME REIT.

More on Dividend Stocks

A worker drinks out of a mug in an office.
Dividend Stocks

Is Brookfield Infrastructure Partners a Buy for its 4.75% Yield?

Brookfield Infrastructure Partners (BIP) has a 4.75% dividend yield. Is it worth it?

Read more »

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

Where to Invest Your $7,000 TFSA Contribution

The TFSA is attractive for investors who want to generate tax-free passive income.

Read more »

The TFSA is a powerful savings vehicle for Canadians who are saving for retirement.
Dividend Stocks

TFSA Investors: 3 Dividend Stocks Worth Holding Forever

These TSX stocks have the potential to grow their dividends over the next decade, making them top investments for TFSA…

Read more »

Tractor spraying a field of wheat
Dividend Stocks

Is Nutrien Stock a Buy for its Dividend Yield?

Nutrien is down more than 50% form the 2022 highs. Is NTR stock now oversold?

Read more »

golden sunset in crude oil refinery with pipeline system
Dividend Stocks

Best Stock to Buy Right Now: Enbridge vs TC Energy?

Enbridge and TC Energy rebounded nicely over the past year. Are more gains on the way?

Read more »

Electricity transmission towers with orange glowing wires against night sky
Dividend Stocks

2 Utility Stocks That Are Smart Buys for Canadians in November

Are you looking for some of the smart buys to consider in November? These utility stocks offer growth and a…

Read more »

View of high rise corporate buildings in the financial district of Toronto, Canada
Dividend Stocks

Is Power Corporation of Canada Stock a Buy for its 5% Dividend Yield?

Is Power Corporation of Canada (TSX:POW) stock's 5% dividend yield worth it? Discover why this resilient stock could be a…

Read more »

hand stacks coins
Dividend Stocks

Here Are My Top 3 Dividend Stocks to Buy Now

These three dividend stocks are ideal for strengthening your portfolio and earning a stable passive income.

Read more »