Why I’ll Never Sell This Perfect RRSP Stock

When you’re investing for retirement, the Registered Retirement Savings Plan (RRSP) is one of the most powerful tools Canadian investors have. You get tax-deferred growth, the ability to reinvest income without paying tax every year, and decades to let your hard-earned savings compound.

However, as powerful as the RRSP can be, it only works as well as what you put inside it.

The whole point of an RRSP is to invest for the long haul. That means buying high-quality businesses, letting them continue to grow and pay dividends, and taking full advantage of the tax shelter by holding them for as long as possible.

That’s why reliability matters so much and why the best RRSP stocks are almost never the most exciting ones. Instead, they’re the companies that can generate steady cash flow, pay reliable dividends, and keep operating no matter what the economy is doing. When you invest for the long haul, stocks that offer consistency are often best.

Retirement investing is about removing stress, not adding to it. That’s why some stocks just fit perfectly in an RRSP. They’re businesses you can buy, reinvest the dividends, and not think twice about for years.

That’s why, if there’s one RRSP stock that I don’t see myself ever selling, it’s Enbridge (TSX:ENB), the $144 billion energy infrastructure stock.

Why Enbridge is such a perfect RRSP stock

There’s a reason Enbridge is one of the most popular dividend stocks on the TSX. It’s one of the largest energy infrastructure companies in North America, and its business is built around assets the economy relies on every single day.

For example, its pipeline network transports roughly 30% of the crude oil produced in North America and about 20% of the natural gas consumed in the U.S, showing just how essential it is to the economy.

In addition to the essential services it provides, though, what makes Enbridge such a reliable business is that it doesn’t depend on commodity prices to generate cash flow. Instead, the majority of its revenue comes from long-term, fee-based contracts. That’s why it’s one of the best stocks to buy and hold in an RRSP.

On top of that, these assets are incredibly difficult to replace since they take years to build and face heavy regulation. Plus, once they’re built, they require minimal capex to maintain, which is another reason Enbridge has such a highly predictable cash flow and why it’s one of the best stocks to buy and hold in an RRSP.

A dividend built for long-term RRSP investors

Enbridge’s essential operations are what make it a stock you can buy and hold with confidence. However, they’re also what allow it to pay such an attractive and consistently growing dividend, another reason it’s the perfect stock to buy in your RRSP.

Not only has the energy giant increased its dividend every year for more than three decades, but it also offers a current yield of roughly 5.9%.

Furthermore, Enbridge intentionally keeps that dividend conservative and sustainable. For example, according to Enbridge’s guidance for 2026, it expects to earn distributable cash flow per share between $5.70 to $6.10. That means its annual dividend of $3.88 per share will likely have a payout ratio between 64% and 68% this year.

That conservative strategy not only ensures the dividend remains reliable and there’s room for growth in the coming years, but it also allows Enbridge to invest the excess cash into future growth to ensure dividend increases for decades to come.

So, when you consider the size and dominance Enbridge has in its industry, the essential services it provides to North America, and the fact that it’s built to be a reliable long-term dividend stock, not only is it ideal for an RRSP, but it’s a stock most investors will never want to sell.

The post Why I’ll Never Sell This Perfect RRSP Stock appeared first on The Motley Fool Canada.

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Fool contributor Daniel Da Costa has positions in Enbridge. The Motley Fool recommends Enbridge. The Motley Fool has a disclosure policy.