Registered Retirement Financial savings Plan (RRSP) season turns “possibly later” into “do it now.” The deduction feels good, however the true win comes after you make investments. A dividend inventory may also help as a result of it pays you to attend, and it may preserve you calm when markets wobble.
Don’t chase the largest yield. Search for money that may cowl the payout throughout a full cycle, plus a enterprise mannequin you truly perceive. In an RRSP, you additionally don’t pay annual tax on dividends, so compounding will get extra runway. However high quality nonetheless issues, as a result of you may’t use a capital loss inside a registered account if a thesis breaks. So, let’s take a look at one to contemplate.
LIF
Labrador Iron Ore Royalty Company (TSX:LIF) is a distinct form of dividend title. It doesn’t function a mine. It earns royalties and fairness earnings from the Iron Ore Firm of Canada (IOC), which sells iron ore focus and pellets. When costs and volumes cooperate, money can gush. When the cycle cools, the payout can shrink. That variable profile is the very first thing to simply accept, as a result of this isn’t a slow-and-steady utility.
During the last 12 months, information has been a mixture of stronger pricing and messier working realities. In its third-quarter (Q3) 2025 report, LIORC stated decrease concentrate-for-sale gross sales tonnages and decrease pellet premiums weighed on outcomes, partly offset by larger iron ore costs and better pellet gross sales volumes. Royalty income nonetheless rose 5% 12 months over 12 months to $43.4 million, however it fell 6% from the prior quarter. That’s the LIF expertise in miniature: the commodity backdrop can enhance, but the main points inside shipments, premiums, and timing can nonetheless swing the quarter.
The dividend cadence can even shock folks. LIORC stated adjusted money stream per share in Q3 2025 was $0.38, primarily as a result of it acquired no dividend from IOC within the quarter, versus a $20.3 million IOC dividend in Q3 2024. That doesn’t imply the mannequin broke. It means IOC pays dividends irregularly, primarily based on money availability, and LIORC’s distributable money can swing with that schedule. When you want the identical cheque each quarter, this dividend inventory can take a look at your persistence.
Into earnings
Now to the earnings. In Q3 2025, fairness earnings from IOC totalled $8.6 million, and internet earnings per share was $0.47. Money stream from operations was $32.7 million, or $0.51 per share. LIORC additionally famous the 65% Fe index averaged US$117 per tonne within the quarter, whereas the pellet premium averaged US$27 per tonne, down 32% from a 12 months earlier. Premiums can transfer profitability sooner than the headline iron ore value, and that’s why LIF can look “effective” on earnings whereas money distributions nonetheless breathe.
For 2026, the outlook stays cautious, even with operational tweaks underway. Rio Tinto stated IOC’s 2025 saleable manufacturing steering ought to land on the low finish of 16.5 million to 19.4 million tonnes, and IOC revised its 2025 capital expenditure outlook to US$288 million from US$342 million. LIORC additionally flagged that enhancing “pit well being” at IOC would require elevated stripping within the coming years, which might influence future IOC dividends to LIORC.
Valuation helps set expectations. The dividend inventory trades at 17.7 instances earnings with a 5.2% yield. Proper now, right here’s what that would usher in from a $7,000 funding.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | ANNUAL DIVIDEND | ANNUAL TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| LIF | $30.45 | 229 | $1.55 | $354.95 | Quarterly | $6,973.05 |
Backside line
So, is LIF a purchase for RRSP season? It may very well be, if you would like earnings with torque and you may deal with uneven quarters. The upside is a debt-free construction and the potential for robust money distributions when the cycle turns pleasant. The draw back is similar factor: commodity publicity, delicate premiums, and irregular upstream dividends. I’d deal with it as a satellite tv for pc holding, not the muse, and I’d pair it with steadier dividend payers, so your general RRSP earnings doesn’t whipsaw. When you can maintain it by the cycle with out flinching, it may earn its place.
