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Canadian retirees and other investors looking for regular passive income take advantage of the contribution space of their tax-free savings account (TFSA). TSX Dividend stocks with good records of dividend growth. The TFSA limit for 2023 is $6,500. This brings the maximum cumulative TFSA contribution room per person to $88,000.
Contrarian investment
A popular strategy for maximizing yield and potential total return involves building a diversified portfolio of high-quality dividend stocks. Market correction It lowers the stock prices of almost all companies. Some stocks that take a beating never recover, but most high-quality, dividend-growth stocks eventually bounce back.
Buying the best dividend stocks takes courage when the upside is out of whack, and there’s always additional downside risk. However, patient investors are often rewarded handsomely for their contrarian choices.
Fortis
Fortis (TSX:FTS) is a great example of a great dividend stock that should be a solid pick in returns. The company derives 99% of its revenue from regulated assets such as power generation facilities, electricity transmission networks and natural gas distribution utilities.
Fortis currently has a capital plan of $22.3 billion, which will increase the rate base by 6% per annum through 2027. This is expected to support a target annual dividend growth of 4-6%. Fortis has increased its dividend in the last 49 years.
Fortis was trading at $54.50 at the time of writing, compared to a 12-month high of $65. Investors buying the dip can enjoy a dividend yield of 4.15% with respectable payout growth.
Bank of Nova Scotia
Bank of Nova Scotia (TSX:BNS) generated fiscal 2022 adjusted earnings topped firm 2021 results. The board raised the dividend by 11% in late 2021 and another 3% when the bank releases second-quarter 2022 earnings. Investors have received a dividend boost in 43 of the last 45 years.
Despite the positive performance, Bank of Nova Scotia’s share price has slumped for much of the past year and is down more than 20% in the past 12 months even after a recent bounce.
Investors are worried that interest rates and persistent inflation could trigger a severe economic downturn and trigger job losses that would result in a wave of mortgage defaults in Canada. It’s certainly possible, but most economists expect a short and mild recession this year.
Even if things look ugly, Bank of Nova Scotia is oversold. Investors can now buy the stock at an attractive 8.8 times trailing 12-month earnings and a dividend yield of 5.8%.
The bottom line of the best stocks to buy for passive income
Fortis and Bank of Nova Scotia are good examples of top TSX dividend stocks that still look cheap today and should continue to raise their payouts in the coming years.
Investors can easily put together a diversified TFSA portfolio, which can yield an average of 5%. This would generate tax-free dividends of $4,400 per year on the $88,000 TFSA. That’s an average of $367 per month!
Current market volatility is to be expected, but these dividend stocks deserve to be on your radar.
Position Passive Income: How to Earn $367 a Month in Your TFSA Portfolio appeared first Motley Fool Canada.
Free Dividend Stock Pick: 7.9% yield and monthly payouts
Canada’s inflation rate has risen to 6.9%, which means you’re effectively Loses money By investing in a GIC or worse, leaving your money in a so-called “high interest” savings account.
That’s why we warn investors about high-yielding Canadian dividend stocks. It’s not just a big yield 7.9%But it pays monthly!
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* Percentages as of 11/29/22
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Further reading
- 3 stocks I buy — but I’m waiting for a pullback
- 2 Best TSX Bank Stocks to Buy in February 2023
- Passive Income Investors: 2 TSX Dividend Stocks to Watch in February
- TFSA: How to Invest $88,000 to Earn $5,450 a Year in Passive Income
- TFSA Investors: A large bank stock that pays nearly 6% in dividend income
The Motley Fool recommends Fortis. A motley fool Disclosure Policy. Fool Contributor Andrew Walker has no position in any of the stocks mentioned.
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