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2 Canadian Dividend Stocks to Boost Your TFSA Income

Good dividend stocks come in many different shapes and sizes. They tend to have a few things in common, though: a strong ability to generate cash flows and solid growth prospects that allow the company to keep posting solid financial results. A high dividend yield doesn’t hurt either. If you are looking for dividend superstars to boost your TFSA income, here are two stocks that can help you do just that.

Monthly dividends and a juicy yield

Companies that offer monthly dividend payouts are hard to find. Inter Pipeline (TSX:IPL) is one such company. The Calgary-based petroleum transportation company operates in some of the richest Canadian regions in terms of natural gas. IPL also operates in various European countries, including France, Sweden, and the United Kingdom.

IPL’s latest earnings quarter — Q3 2018 — was a bit mixed of a mixed bag. On the one hand, the company recorded its highest funds from operations (FFO) and its highest net income ever in a quarter. This performance was primarily driven by the company’s Natural Gas Liquids (NGL) Processing business segment. NGL revenue and FFO climbed by 37% and 72%, respectively. IPL’s other segments did not perform nearly as well.

Because IPL spends a considerable amount of capital on infrastructure — as petroleum transportation firms tend to do — the company’s FFO is a good way to gauge its ability to sustain its dividend payouts. During last year’s third quarter, IPL’s payout ratio was 96%, but dividends paid only accounted for 54.5% of the company’s FFO.

IPL completed the acquisition of NuStar Energy’s operations in Europe late last year. NuStar Energy is a San Antonio-based liquids terminal and pipeline operator. The acquisition will help IPL bolster its Bulk Liquid Storage segment, which is currently its smallest segment in terms of revenue. Acquiring NuStar’s operations in Europe increased IPL’s storage capacity by 33% and should help the company’s bottom line.

With a high dividend yield, monthly dividend payouts, strong cash flows, and solid growth prospects, IPL would be a fine addition to your portfolio.

High yield and a cheap price

TransAlta Renewables (TSX:RNW) currently trades at just above $11.50 at the time of writing. The company also offers a juicy yield above 8%. RNW clearly expects to achieve its explicitly stated goal to “create stable cash flows and consistent returns for investors” partly by returning a lot of capital to investors by way of dividends.

RNW is a provider of a necessity good, namely electricity. The demand for electricity remains relatively constant regardless of economic conditions since it is an essential aspect of modern life. What’s more, RNW is in the business of the production of renewable energy, an important industry within the utility sector. The demand for renewable energy is expected to grow fast in the coming years.

During last year’s third quarter, the RNW’s results were overall improved year over year. Renewable energy production improved by 10% year over year, and net earnings were positive, instead of negative compared to the corresponding period from the previous fiscal year (increased by $85 million). Although the company saw a decrease of about 7% in cash available for distribution, dividends paid still represent about 32% of this important figure.

The bottom line

IPL offers the advantage of a monthly dividend payout, which is great for those looking to replace a monthly income. RNW is a cheap, good-quality dividend stock, and those aren’t easy to find. Both stocks offer a juicy yield and solid growth prospects. Grab them today to boost your TFSA income.

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Fool contributor Prosper Bakiny has no position in the companies mentioned. 

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