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Money RRSP Investors: 2 Dividend Stocks to Buy on a Market Pullback

23:35  05 february  2018
23:35  05 february  2018 Source:   fool.com

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Equity markets could be setting up for a much-needed pullback, and investors with some cash on the sidelines in their RRSPs are wondering which stocks might be attractive picks.

Let’s take a look at Enbridge Inc.(TSX:ENB)(NYSE:ENB) and Bank of Nova Scotia(TSX:BNS)(NYSE:BNS) to see why they should be on your radar.

Enbridge

Quotes in the article

Enbridge Inc

ENB

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34.37
-0.33
-0.95%
Bank of Nova Scotia

BNS

62.29
-2.10
-3.26%
S&P/TSX Composite

0000

15,334.81
-271.22
-1.74%
S&P/TSX Venture Composite

ISPVX

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-8.45
-1.04%

Enbridge completed its $37 billion takeover of Spectra Energy last year in a deal that created North America’s largest energy infrastructure company.

Spectra added important gas assets and provided a nice boost to the capital plan. In fact, Enbridge plans to complete about $22 billion in near-term projects over the next three years.

As the new assets go into service, management expects cash flow to increase enough to support annual dividend hikes of at least 10% through 2020.

Enbridge is shifting its strategy to focus on regulated businesses and plans to sell $10 billion in non-core assets, of which $3 billion could be sold in 2018. The company will use the proceeds to reduce debt and strengthen the balance sheet.

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Enbridge has a strong track record of dividend growth, so investors should feel comfortable with the guidance. At the time of writing, the stock provides a yield of 5.8%.

Bank of Nova Scotia

Investors often overlook Bank of Nova Scotia in favour of its larger peers, but the company probably deserves more respect.

Why?

Bank of Nova Scotia has invested heavily in Latin America in recent years, with a particular focus on Mexico, Peru, Chile, and Colombia. The four countries are the core of the Pacific Alliance, a trade bloc set up to promote the free movement of goods and capital among the member states.

As the middle class grows in the combined market of more than 200 million consumers, Bank of Nova Scotia stands to benefit from increased demand for loans and investment products.

The international operations already account for about 30% of the bank’s net income.

Some investors are concerned that rising interest rates could trigger a downturn in the Canadian housing market. A total meltdown would certainly hit the banks, but most analysts predict a gradual pullback, and Bank of Nova Scotia’s mortgage portfolio is capable of riding out a rough patch.

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Overall, rising interest rates tend to be a net positive for the banks.

Bank of Nova Scotia’s dividend provides a yield of 3.9%.

Is one more attractive?

Both stocks should be solid buy-and-hold picks for a dividend-focused RRSP. I would probably split a new investment between the two companies today.

These are household names, but stocks with a lower investor profile are also worth considering when the market pulls back.

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For the full behind-the-scenes story straight from Motley Fool Canada, just click here now.

Fool contributor Andrew Walker owns shares of Enbridge. The Motley Fool owns shares of Enbridge. Enbridge is a recommendation of Stock Advisor Canada.

Retirees: Flock to These Stocks in a Wobbly Market .
A shaky stock market should lead retirees to stocks such as Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) and Andrew Peller Ltd. (TSX:ADW.A).The fundamentals of the U.S., Canadian, and global economy remain very strong. However, a bull run that has dated back to 2009 has shown signs of strain. For those nearing retirement, it may be time to adjust your portfolios and stack up on dividend-yielding stocks that offer stability in the long term.

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