People want to be financially secure in retirement as much as possible, but the path is hazy. Canadians are fortunate in this aspect because they can achieve the goal despite economic challenges. The federal government introduced the Registered Retirement Savings Plan (RRSP) in 1957, and it has lived on as the cornerstone of retirement planning in the country.
With falling interest rates lessening financial stress, the motivation to save for retirement is back. Retirement investors can use their contribution limits to purchase and hold two dividend stalwarts in the tax-sheltered account. Royal Bank of Canada (TSX:RY) and Enbridge (TSX:ENB) are RRSP essentials in this time and age.
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Largest Canadian bank
Canadian big bank stocks have recovered from their slump due to sky-high interest rates. Royal Bank of Canada is a no-brainer buy if you gravitate toward dividend stocks to build a nest egg. The bank’s new Financial Habits Poll results reveal that 75% of respondents believe they possess good financial habits.
RBC suggests harnessing and cultivating these good financial habits because of their positive impact on overall well-being. This $237.66 billion bank is the largest TSX company by market capitalization. It is 160 years old and boasts a 154-year dividend track record.
At $168.02 per share, current investors enjoy a 29.2% year-to-date gain and partake in the 3.38% dividend. Given the 48.98% payout ratio, the quarterly payouts should be safe and reliable. The current $31,560 fixed RRSP contribution limit for 2024 can generate $266.68 in quarterly income.
Market observers were impressed with RBC’s standout third-quarter (Q3) fiscal 2024 performance. In the three months ended July 31, 2024, net income rose 16% to $4.5 billion compared to Q3 fiscal 2023. Besides the 17% year-over-year earnings growth of the personal and commercial banking segment to $2.49 billion, the results reflect the full-quarter contribution of HSBC Canada.
“Our Q3 results demonstrate that RBC continues to operate from a position of strategic and financial strength with solid revenue growth and momentum underpinned by a strong balance sheet, robust capital position and prudent risk management,” said Dave McKay, RBC’s president and chief executive officer (CEO).
McKay added that RBC is better positioned than ever to accelerate its next growth phase and deliver long-term value to clients, communities and shareholders following changes in the leadership executive team and business segments.
Industry heavyweight
Enbridge is the perfect complement to RBC in your RRSP stock portfolio. The industry heavyweight is a Dividend Aristocrat and titan rolled into one. At $55.37 per share (+22.62% year to date), the dividend yield is a juicy 6.61%. Another compelling reason to own this top-tier energy stock is the 29-year annual dividend increase record.
The $120.5 billion energy infrastructure company (fourth largest on the TSX) takes pride in its diversified low-risk pipeline and utility model. According to management, the recent utility acquisitions from Dominion Energy in the U.S. enhance and increase the visibility of Enbridge’s growth outlook.
Build retirement wealth
RBC and Enbridge are essentials in an RRSP. The pair can help you build retirement wealth and secure your financial future. More importantly, your money is safe and secure while growing tax-free.
