Devour Dividends in Your TFSA With These 3 Stocks Yielding up to 6.8%

TFSA investors on the hunt for income should scoop up dividend stocks like AltaGas Ltd. (TSX:ALA) this year.

| More on:
A stock price graph showing growth over time

Image source: Getty Images.

Last month, I’d discussed the importance of RRSP utilization. Investors, particularly those in younger demographics, need to digest this point. However, my favourite investing vehicle remains the Tax-Free Savings Account (TFSA).

The TFSA is flexible and can be a fantastic vehicle for varying types of investors. It can be a lightning rod for those building a growth portfolio, and it can churn out tax-free income for more cautious investors. Today, we are going to look at three stocks that can help you gobble up dividends in your TFSA for years to come.

AltaGas (TSX:ALA)

AltaGas is a Calgary-based company that owns and operates a diversified basket of energy infrastructure businesses. Shares of AltaGas were up 29.7% in 2019 as of close on April 3. The stock was still down 23.3% from the prior year.

In 2018, AltaGas reported normalized EBITDA of $1 billion, which was up 2.7% from the previous year. Roughly $1 billion in capital growth projects are expected to come into service in 2019. The company forecasts normalized EBITDA in the range of $1.2-1.3 billion in fiscal 2019. It also announced that it is pursuing $1.5-2 billion in asset sales this year.

The board of directors last announced a monthly dividend of $0.08 per share. This is a downgrade from its previous monster payout, but it still represents an attractive 5% yield.

TransAlta Renewables (TSX:RNW)

TransAlta Renewables is a Calgary-based company that operates through a North American Gas and Renewables division as well as an Australian Gas division. Shares were up 32.7% in 2019 as of close on April 3. The stock was up 17.9% year over year.

In 2018, TransAlta exceeded its outlook and posted comparable EBITDA of $430 million. It forecasts comparable EBITDA between $425 million and $455 million in fiscal 2019. Cash distribution and adjusted from operations also beat expectations in 2018, but growth is projected to be more tepid in 2019. Back in late 2018, I’d discussed why renewables were still a great target for investors.

TransAlta last declared a monthly dividend of $0.07833 per share. This represents a 6.8% yield. The company has achieved dividend growth for six consecutive years.

Russel Metals (TSX:RUS)

Russel Metals is a Mississauga-based metal distribution company. The stock was up 14.1% in 2019 as of close on April 3. Shares were still down 12.7% year over year as the metals sector suffered from volatility due to global trade tensions.

In 2018, Russel Metals reported revenue of $4.16 billion compared to $3.29 billion in the prior year. Net income grew to $219 million over $124 million and earnings per share increased to $3.53 over $2.00 in 2017. Increased prices from tariffs gave a boost to Russel Metals in 2018, which the company predicted when they were originally announced. Steel prices have softened but are projected to remain stable in Q1 2019.

The board of directors approved a quarterly dividend of $0.38 per share in its Q4 2018 report. This represents an attractive 6.2% yield.

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 Ambrose O'Callaghan has no position in any of the stocks mentioned. AltaGas is a recommendation of Stock Advisor Canada.

More on Dividend Stocks

young woman celebrating a victory while working with mobile phone in the office
Dividend Stocks

3 CRA Benefits Most Canadians Can Grab in 2024

You can save on taxes by claiming the dividend tax credit on Fortis Inc (TSX:FTS) shares.

Read more »

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

Engineers walk through a facility.
Dividend Stocks

1 TSX Stock I Wouldn’t Touch With a 10-Foot Pole

AtkinsRéalis (TSX:ATRL) is one TSX stock I'd never invest in.

Read more »

edit Woman in skates works on laptop
Dividend Stocks

3 No-Brainer Stocks to Buy Under $30

These three stocks all offer a huge deal for investors looking for dividends, as well as growth that will last.

Read more »

You Should Know This
Dividend Stocks

How to Convert a $300 Monthly Investment Into $338 in Monthly Income

If you want a certain amount in monthly passive income, invest a similar amount today and leave the rest to…

Read more »

Increasing yield
Dividend Stocks

3 Income Stocks With Big Yields to Consider in April 2024

If you haven’t yet made your March investments, here are three income stocks to buy the dip and lock in…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

RRSP Investors: Don’t Miss Out on This Contribution Hack!

This hack has so many benefits for you -- not just when you put it in your RRSP but for…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Passive Income: 2 Safe Dividend Stocks to Own for the Next 10 Years

Dividend stocks such as Manulife and Fortis can help you generate a stable and recurring passive-income stream.

Read more »