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RRSP Investors: 2 Top Canadian Stocks to Tap Global Population Growth

Andrew Walker
Businessmen teamwork brainstorming meeting.
Businessmen teamwork brainstorming meeting.

Advisors often recommend adding exposure to global growth as a way to diversify a retirement portfolio.

This is particularly true for Canadian investors. The bulk of the TSX Index is centred around domestic banks and energy companies, making it difficult to get balanced exposure across sectors, let alone geographic markets.

Buying stocks outside Canada is possible, but the costs can be higher and there are political and currency risks to consider.

Fortunately, some top Canadian companies have extensive international operations, providing investors with safer ways to get global exposure.

Let’s take a look at two stocks that might be interesting picks right now for a self-directed RRSP.

Sun Life

Sun Life Financial (TSX:SLF) (NYSE:SLF) just reported solid results for Q3 2019, supported by strong revenue and earnings in its operations in Asia.

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Sun Life has invested heavily over the past two decades to build partnerships and subsidiaries in a number of international markets, including a well-established presence in India, Vietnam, Indonesia, China, Malaysia, the Philippines, Singapore, and Japan.

A growing middle class offers significant long-term opportunities for insurance and wealth management products and service in these areas.

Canada and the United States remain the largest contributors to revenue and profits, but the engine of growth for the future lies in its global operations.

Total assets under management topped $1 trillion at the end of the third quarter. The company generated underlying net income of $809 million compared to $730 million in the same period last year. Underlying return on equity rose to 15.5% from 14% and earnings per share jumped to $1.37 from $1.20.

The board raised the quarterly dividend by 5% to $0.055 per share at writing.

Sun Life’s stock is up from $45 at the start of 2019 to $61 per share. At the current price, investors can pick up a yield of 3.6%.

Nutrien

Nutrien (TSX:NTR)(NYSE:NTR) produces potash, nitrogen, and phosphate for sale to wholesale buyers around the globe. The company’s potash marketing company, Canpotex, negotiates deals with countries such as China and India. These contracts normally set the bar for wholesale pricing for the year.

Potash prices saw an extended downturn but have recovered in recent years. Total global shipments have increased to new records, and while sales and prices in the second half of 2019 have weakened due to extreme weather conditions and trade battles, the long-term prospects remain robust.

Farmers use crop nutrients to improve production yield. The demand for the fertilizers is expected to increase as food requirements expand in line with population growth. At the same time, less arable land is available as a result of urban development.

Nutrien raised the dividend twice in the past year. The existing distribution provides an annualized yield of 3.7%.

The stock trades at $64.50 per share compared to $73 a year ago, so there’s decent upside potential on a rebound in the market. Management anticipates a strong recovery in 2020 as customers work through existing stockpiles.

The bottom line

Sun Life and Nutrien are top-quality Canadian companies that give investors exposure to global economic and population growth without taking on some of the risks associated with buying stocks in specific countries.

If you only buy one, Nutrien appears cheap today and should see a decent rebound in the next couple of years.

More reading

The Motley Fool recommends Nutrien Ltd. Fool conbtributor Andrew Walker owns shares of Nutrien Ltd. Nutrien is a recommendation of Stock Advisor Canada.

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool Canada’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Motley Fool Canada 2019