One of the greatest things a person can do for themselves is invest. The Tax-Free Savings Account (TFSA) offers Canadians a perfect opportunity to get into the world of investment without the fear that most of their investments will just be taxed by the government.
Choosing stocks that have a strong history of earnings growth, a bright future, and that dish out a healthy dividend yield are therefore ideal. These provide even the smallest portfolio with the option to take those funds and reinvest them towards their future payouts. Doing so can change your small investment into a nest egg that would make any investor green with envy.
But not all dividend stocks are created equal. Let’s take a look at three great, safe options for your portfolio that deliver high yields.
There are a lot of investors out there who like to get Cineplex (TSX:CGX) down. But the fact remains that even with a lagging industry, Cineplex remains with a monopoly on a Canada-wide movie theatre industry.
Cineplex isn’t dying. It’s true that movie attendance has slumped, with this year’s first quarter reflecting a 15.6% drop compared to last year, adding to the last few years of lower attendance. However, it’s not all Cineplex’s fault. Hollywood has slumped too, not making those blockbuster movies patrons are dying to see. But this summer, things have improved with the release of films such as Avengers: Endgame and Aladdin.
Cineplex is expanding to be less movie focused and more entertainment driven. The Rec Room brings in not only patrons looking for food and games but offers up a place to book venues for concerts, parties, and the like. And for those thinking the company hasn’t got in on streaming services, it has, offering a “super ticket” for those wanting to see and then buy a movie upon release.
Cineplex has a drool-worthy dividend of 7.84% at writing, making it an excellent opportunity for investors wanting to buy shares at a low price and see passive income pour in. The company has a strong history of dividend payouts, maintaining an increase every year since 2005.
Telus is a perfect long-term stock, as the company has been on a steady increase since 2009, with healthy dividend growth of 33% in the last five years. That dividend is likely to continue growing, given that this company is strong within a limited and demanded industry.
While other industries have seen slacking results, Telus delivered a 50% increase in new customers to its network compared to last year in its most recent quarter. Telus may lack the diversity of its peers, but it also offers something that’s hard to find: consistency. It’s a fast-growing company, with a fast-growing dividend that you just don’t see in the telecom industry.
Currently, the stock offers a dividend yield of 4.59%, but given its history, that yield is likely to rise multiple times each year, making it the perfect passive-income addition to your portfolio.
Royal Bank is Canada’s largest bank and is set to grow even further after investing within the United States in the wealth and commercial management sectors. These are highly lucrative areas that should produce high-margin gains for years to come. Even if a recession occurs, Royal Bank has a history of jumping right back to where it left off within a few months. That makes it an ideal defensive stock should a recession hit the markets.
As for its yield, it has risen 32% in the last five years to where it sits now at 3.89% annually. Its consistent performance, strong business, and growing yield are all great reasons to consider this stock for your passive-income portfolio.
An investment of $15,000 for 20 years would turn into $111,330.51 with dividends reinvested by choosing these three stocks. That’s not a bad take away with only a small investment and not putting another cent back in. That’s enough to make anyone jealous.
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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.