Passive income stocks are the perfect opportunity for investors looking to reinvest funds and grow their bottom line. After the initial stock purchase, investors don’t have to spend a single penny to add to their investment. If they have a Tax-Free Savings Account (TFSA), that makes it even better, as those funds aren’t even taxed by the government.
That leaves investors with $63,500 of contribution room this year to use toward their passive-income portfolio. The three stocks below all have high dividend yields as well as a history of dividend growth. They also have a bright future that should support dividend payouts for years to come.
Let’s dig in.
Inter Pipeline Ltd. (TSX:IPL) starts off our list today, a pipeline company that has increased its dividend yield by about 30% in the past five years, with a solid 14 year run of payments.
The stock is down recently due to trade tensions and the oil and gas industry overall, but the firm itself is strong. In fact, the company is in growth mode. The company’s Heartland Petrochemical Complex had investors wary at first, given the hefty price tag and addition to its debts. However, it’s on time and within budget, and will significantly add to the company’s future earnings.
Beyond that, Inter Pipeline is supported by long-term contracts to support its dividend for decades. A $21,167 investment would result in $1,667.25 annually in dividends.
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Next up we have WPT Industrial REIT (TSX:WIR.U), a real estate investment trust within a booming industry, with 8.6% growth in its dividend yield during the last five years.
At first, light industrial properties seems like a pretty boring space that doesn’t sound like it would make you a ton of cash. But WPT has zeroed in on an area that the future needs: e-commerce. The rise of e-commerce has meant the rise in demand for places to store products. With 70 light industrial properties, WPT is a prime property owner that is currently acquiring even more properties for the future of this industry.
With a strong dividend yield of 5.73%, WPT will provide a $21,167 investment with $1,193.96 in annual income.
The company is well supported as one of the largest banks in Canada, but it’s the recent expansion into the United States that has investors excited. TD has recently become one of the top 10 banks in the United States, and has recently stated it would now expand into the wealth management sector, a highly lucrative area.
With already strong growth and further strong growth set up for the future, its 3.84% dividend yield looks well supported. A $21,167 investment today would give investors $805.12 in annual income.
Investors using their TFSA to buy these stocks today would walk away with $3,666.33 of annual income to do with what they please. However, the best thing money can buy is reinvestment. Using your contribution room and leaving that money there for just a decade and reinvesting those dividends could turn your $63,500 TFSA into $145,458.71.
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 Amy Legate-Wolfe has no position in any of the stocks mentioned.