Retirees are on the hunt for income stocks to add to their TFSA portfolios.
When the investments are held inside a TFSA, the distributions from REITs and dividend stocks can go straight into your pocket without having to set some aside for the taxman.
Let’s take a look at five income stocks that might be interesting picks right now for your passive-income buy list.
RioCan Real Estate Investment Trust
RioCan (TSX:REI.UN) is working through a transition that will see the company sell up to $2 billion in non-core buildings in secondary markets, so it can fund its mixed-used developments in major cities. The strategy of combining residential units and retail space in desirable urban locations makes sense, as the rise in housing costs puts homeownership out of reach for more young professionals.
RioCan has a strong balance sheet and pays out a reliable distribution each month. Investors who buy today can pick up a yield of 5.4%.
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Power Financial (TSX:PWF) is a holding company with interests or majority positions in a number of Canada’s highly recognized insurance and wealth management firms including Investors Group and Great-West Life.
The subsidiaries are performing well and Power Financial recently raised its dividend by 5%. The company also announced a significant share buyback.
The dividend provides a yield of 6%.
BCE (TSX:BCE)(NYSE:BCE) is a giant in the Canadian communications sector. The combination of the wireless and wireline infrastructure with the media division gives BCE the opportunity to interact with most Canadians on a daily basis. Free cash flow is expected to rise by 7-12% in 2019, and investors should see steady annual dividend growth continue around 5% per year.
The payout is about as safe at it gets in the Canadian market and offers a 5.25% yield.
Canadian Natural Resources
Canadian Natural Resources (TSX:CNQ)(NYSE:CNQ) is a major natural gas and oil producer with arguably the best resource portfolio in the country. The company has a very strong balance sheet and is good at allocating capital to the best opportunities as market prices shift.
CNRL raised the dividend by 12.5% this year and is buying back shares while also reducing debt with excess free cash flow. The stock appears oversold right now and offers a solid 4.3% yield.
TC Energy (TSX:TRP)(NYSE:TRP) is the new name for TransCanada. The energy infrastructure giant has more than $30 billion in development opportunities that should support steady dividend growth in the coming years. The stock has enjoyed a nice rally in 2019, and more gains should be on the way. The current dividend provides a yield of 4.5%.
The bottom line
All five companies should be attractive picks for an income-focused TFSA portfolio today. An equal investment in the companies would provide balanced exposure to a variety of sectors and generate above-average 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 Andrew Walke owns shares of BCE.