TFSA Income Investors: 2 Monthly Dividend Stocks Paying up to 6.7%

Income investors are searching for reliable dividend stocks to add to their Tax-Free Savings Account (TFSA).

The strategy is a wise one for people looking to get the most out of their savings, as any income generated inside the TFSA is protected from the taxman.

Let’s take a look at Shaw Communications Inc. (TSX:SJR.B)(NYSE:SJR) and Altagas Ltd. (TSX:ALA) to see why they might be interesting picks.


Shaw is making progress on a major transition process that began last year, and investors are starting to move back into the stock.

What’s up?

After refusing to enter the mobile wars for years, Shaw finally realized it needed to have a wireless offering and jumped in to the market with its purchase of Wind Mobile.

Management rebranded the division as Freedom Mobile, and the business now provides Shaw with the ability to compete with its peers on communications packages that include wireless, TV, and internet services.

The company is working through technical challenges associated with switching from 3G to LTE, but investors see the opportunity and have pushed the stock up 25% in the past 12 months.

In order to pay for the Wind Mobile deal, Shaw sold its media business to Corus Entertainment. Some pundits questioned the wisdom of the move, but it might prove to be a well-timed exit, as the sale coincided with the shift to pick-and-pay TV services in the Canadian market.

Shaw’s monthly dividend provides a yield of 4%.

Once all the dust settles on the transition process, investors could see the distribution begin to rise again.


Altagas flies under the radar of most investors who are looking for an energy infrastructure pick, but that might begin to change.


The company has a solid asset mix in the power, utility, and gas sectors with businesses located in Canada and the United States.

Growth has traditionally come from acquisitions and organic developments, and that trend continues.

Altagas is in the process of buying Washington D.C.-based WGL Holdings for $8.4 billion. The company is also building a natural gas storage facility in Nova Scotia and has several gas liquids projects under way in British Columbia, including a new propane export terminal in Prince Rupert.

As the new assets go online, Altagas says it should generate enough additional cash flow to support dividend growth of at least 8% per year through 2021.

The current monthly dividend of $0.175 per share yields 6.7%.

Is one more attractive?

Both stocks should be solid picks for a TFSA income portfolio. At this point, Altagas provides the higher yield and probably offers stronger dividend-growth prospects over the medium term.

As such, I would probably make the energy infrastructure company the first choice today.

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Fool contributor Andrew Walker owns shares of Altagas. Altagas is a recommendation of Stock Advisor Canada.

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