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RRSP Investors: Earn a $7,800 (and Growing) Income Stream With These 3 Top Stocks

Brian Pacampara, CFA
Piggy bank next to a financial report
Piggy bank next to a financial report

Hi, Fools. I’m back to highlight three top dividend-growth stocks worth checking out. As a quick reminder, I do this because companies with consistent dividend growth

  • provide a rising income stream that can defend against dangerous inflation; and

  • tend to outperform the market average over the long term.

The three stocks I’ll talk about today average a healthy 3.9%. So, in a $200K RRSP account, the trio will provide healthy income of $7,800 over the next year — with the very strong likelihood of increasing each and every year after.

Let’s get to it.

Empire gives back

Leading things off is supermarket operator Empire Company (TSX:EMP.A), which has delivered 24 straight years of dividend growth.

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Empire uses its scale and roughly 1,500 retail stores — under various banners including Sobeys, Safeway, and FreshCo — to keep delivering the goods for shareholders. In the most recent quarter, revenue improved 4%, EPS increased 14%, and same-store sales grew 3.3%.

“Our execution continued to improve this quarter, building on our run of positive tonnage growth and strong same-store sales across the country,” said CEO Michael Medline. “Improving margin rates in the third quarter are a harbinger of more progress to come as category reset changes start flowing through to our bottom line.”

Empire shares are up 30% over the past six months and offer a yield of 1.5%.

Plaza play

With 16 years of consecutive dividend growth, retail property owner Plaza Retail REIT (TSX:PLZ.UN) is next up on our list.

Plaza’s current portfolio includes a stake in 284 properties totaling about 8.2 million square feet across Canada, allowing the company to provide reliable and growing cash distributions. In the most recent quarter, total property rental revenue improved 1.5% while net operating income increased 1.6%.

Distributions per unit, meanwhile, increased 3.7% to $0.07.

“We continue to remain very optimistic about our future prospects,” said CEO Michael Zakuta. “Our unit price does not reflect the underlying value of our business nor our very strong pipeline of development and redevelopment projects that we anticipate coming on stream in 2019 and 2020.”

Plaza shares are up 7% in 2019 and currently boast a healthy yield of 6.8%.

Sunny ways

Rounding out our list is oil and gas giant Suncor Energy (TSX:SU)(NYSE:SU), which has delivered 17 consecutive years of dividend increases.

Suncor’s integrated operations and strong balance sheet allow it to generate stable cash flow even amid volatile oil prices. In the most recent quarter, the company generated $2 billion in funds from operations and $3 billion in operating cash flow.

Based on those numbers, management upped the dividend to $0.42 per share and approved an additional buyback program of up to $2 billion.

“We remain focused on capital discipline and ensuring safe and reliable operations across our business,” said CEO Steven Williams. “Suncor is well positioned to continue to grow production and cash flow, and to increase returns to shareholders across a wide range of market conditions.”

Suncor is up 16% so far in 2019 and offers a solid yield of 3.4%.

The bottom line

There you have it, Fools: three attractive dividend-growth stocks worth checking out.

As always, they aren’t formal recommendations. They’re simply a starting point for more research. The breaking of a dividend-growth streak can be particularly painful, so plenty of due diligence is still required.

Fool on.

More reading

Fool contributor Brian Pacampara owns no position in any of the companies mentioned.

 

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