The RRSP, or Registered Retirement Savings Plan, is a popular account in Canada that helps individuals save for retirement and reduce their tax liabilities. For instance, if you earn $100,00 each year and allocate $15,000 towards the RRSP, your taxable income for the particular year reduces to $85,000.
Moreover, any income earned within the RRSP in the form of dividends, capital gains, or interests is deferred until withdrawal, enabling Canadians to build a larger retirement fund over time.
You can contribute up to 18% of your earned income to the RRSP. But Canadians also have an RRSP contribution limit, which is $31,560 in 2024, up from $30,780 in 2023.
Given the RRSP is a retirement fund, Canadian investors should consider holding quality blue-chip stocks in their portfolio and generate inflation-beating returns.
Here are three such TSX stocks RRSP investors should consider owning in 2024.
Royal Bank of Canada stock
The largest TSX company in terms of market cap, Royal Bank of Canada (TSX:RY) is valued at $186 billion. Down 11.4% from all-time highs, the banking giant offers shareholders a tasty dividend yield of 4.2%.
While RBC is part of a cyclical sector, it has raised dividends by 10% annually for more than two decades, which is exceptional. Its diversified revenue streams, robust balance sheet, conservative lending policy, and strong balance sheet have allowed RBC to easily navigate multiple economic downturns in the past.
It aims to increase earnings by 7% each year and maintain a return on equity of 16%. Priced at 11 times forward earnings, RBC stock trades at a reasonable multiple right now.
Brookfield Infrastructure Partners stock
Brookfield Infrastructure Partners (TSX:BIP.UN) owns and operates a portfolio of cash-generating assets across verticals such as utilities, clean energy, transportation, data centres, and others.
BIP stock trades 29% below all-time highs and offers shareholders a forward yield of more than 5%, which is quite tasty. Despite an inflationary environment and higher interest rates, Brookfield Infrastructure increased funds from operations, or FFO by 8% to $2.16 per unit in the last three quarters.
Comparatively, it distributed dividends worth $1.15 per share in this period, indicating a payout ratio of less than 55%, providing the company with the flexibility to reinvest in growth projects, increase dividends, and strengthen the balance sheet.
BIP has increased annual dividend distributions by 8% annually in the last decade and aims to increase these payouts between 5% and 9% annually in the medium term.
Canadian Utilities
The final blue-chip TSX stock on my list is Canadian Utilities (TSX:CU), one of the most popular dividend-paying companies in the country. Valued at $8.8 billion by market cap, Canadian Utilities ended the third quarter with more than $10.5 billion in debt, making investors nervous. Due to a challenging macro environment, Canadian Utilities stock is down 28% from all-time highs, raising its yield to 5.7%.
Canadian Utilities recently declared a quarterly dividend of $0.4531 per share, an increase of 1% year over year. It was the 52nd consecutive year of dividend increases in Canadian Utilities, the highest streak among TSX stocks.
With $23 billion in assets, Canadian Utilities is part of a recession-resistant sector, enabling it to generate stable cash flows across market cycles.
