3 High-Yield Stocks for a TFSA Income Portfolio

Here’s why Enbridge Inc. (TSX:ENB)(NYSE:ENB) and two other dividend picks deserve a closer look today.

| More on:
The Motley Fool

Canadians are searching for ways to boost the returns they get on their hard-earned savings.

One strategy involves owning quality dividend-growth stocks inside a Tax-Free Savings Account (TFSA). Since the inception of the TFSA in 2009, investors now have up to $52,000 in contribution room available.

At this level, investors can generate some impressive tax-free earnings by owning a portfolio of high-yield stocks.

Let’s take a look at three Canadian companies that might of interest today.

Enbridge Inc. (TSX:ENB)(NYSE:ENB)

Investors don’t often get a chance to buy an industry leader like Enbridge at a depressed price, but that’s exactly the situation today.

What’s going on?

The company’s stock has come under pressure this year amid an overall pullback in the energy infrastructure segment, but the sell-off might be overdone. Enbridge has $31 billion in commercially secured projects on the go that should drive revenue and cash flow higher in the coming years.

The company has said it expects the cash flow impact to support annual dividend increases of 10-12% through 2024.

Even if Enbridge doesn’t hit the top end of the guidance, investors are still looking at solid returns and decent dividend growth.

The stock recently bounced off the 2017 low, but it remains attractive. At the time of writing, investors can pick up a yield of 5.2%.

Inter Pipeline Ltd. (TSX:IPL)

IPL owns natural gas liquids (NGL) extraction assets, conventional oil pipelines, oil sands pipelines, and a liquids storage business in Europe.

The company has done a good job of navigating through the oil rout, and even added some strategic assets at attractive prices, including the $1.35 billion purchase of two NGL extraction facilities from The Williams Companies.

IPL is also evaluating $3 billion in development projects that could be in service by the end of 2021.

The company just raised the dividend, and more gains should be on the way as new assets boost revenue and cash flow. IPL pays a monthly distribution of $0.14 per share for an annualized yield of 6.3%.

Russel Metals Inc. (TSX:RUS)

Russel Metals is a steel distribution company with metals service centres, energy products, and steel distributors across Canada and the United States.

The company has rebounded from a tough run during the worst part of the oil downturn, and investors are enjoying some nice returns.

Russel reported Q3 net income of $34 million, or $0.55 per share compared to $16 million in the same period last year. Free cash flow in the quarter jumped to $0.90 per share from $0.38 in Q3 2016.

Russel pays a quarterly dividend of $.38 per share, so there is ample room for increases to the payout.

The stock is trading near its highs for the year, but investors can still pick up a 5.3% yield.

The bottom line

TFSA investors can still find reliable high-yield stocks to help boost the returns on their savings. An equal investment in these three names would generate an average yield of 5.6%, with strong dividend-growth prospects.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

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

More on Dividend Stocks

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Dividend Stocks

TFSA Magic: Earn Enormous Passive Income That the CRA Can’t Touch

If you're seeking out passive income, with zero taxes involved, then get on board with a TFSA and this portfolio…

Read more »

Man with no money. Businessman holding empty wallet
Dividend Stocks

2 Stocks Under $50 New Investors Can Confidently Buy

There are some great stocks under $50 that every investor needs to know about. Here’s a look at two great…

Read more »

think thought consider
Dividend Stocks

Down 10.88%: Is ATD Stock a Good Buy After Earnings?

Alimentation Couche-Tard (TSX:ATD) stock might not be the easy buy-case it once was. Here’s a look at what happened.

Read more »

money cash dividends
Dividend Stocks

TFSA Dividend Stocks: Earn $1,200/Year Tax-Free

Canadian stocks like Fortis are a must-have in your portfolio to earn tax-free yields for decades.

Read more »

sale discount best price
Dividend Stocks

1 Dividend Stock Down 11 Percent to Buy Right Now

Do you want a great dividend stock down 11% that can provide years of growth potential? Here's one heavily discounted…

Read more »

Growth from coins
Dividend Stocks

1 Grade A Dividend Stock Down 11% to Buy and Hold Forever 

If you're looking for the right dividend stock at the right price, you're going to want to consider this insurance…

Read more »

Target. Stand out from the crowd
Dividend Stocks

2 Dividend Stocks to Double Up on Right Now

Are you looking for dividend stocks to buy right now? Here are two top picks!

Read more »

edit Taxes CRA
Dividend Stocks

Tax Time: How to Keep More of Your Money

Nearly everyone hates paying taxes, although Canadians can lessen the financial pain with the right tax strategies.

Read more »