The Motley Fool

TFSA Investors: 3 Dividend Stocks Yielding Up to 9%

Image source: Getty Images

If you’re a dividend investor looking for some quality stocks to put into your TFSA, then you know that yield is always going to be an important consideration. While it’s not the only factor, it is a very important one. Below are three stocks that offer a variety of different payouts for your portfolio that can help you earn a lot of income along the way.

Stable choice

Empire Company Limited (TSX:EMP.A) is a good place to start. Although it doesn’t offer a terribly high payout, the grocery retailer can offer a great deal of stability. Whether you’re worried about a recession or just looking to buy and hold for a long time, Empire can be a great starting point.

The company owns some of the top grocery chains in the country, including Sobeys, Safeway, IGA, and many others. It’s a good defensive stock to hold that can balance out your portfolio in troubling times.

Over the past 12 months, Empire’s stock has climbed around 50%. With consistent profits and quarterly sales normally up over $6 billion, investors know what to expect from the stock. Empire also provides a solid dividend of 1.4% per year. And while the dividend may not be the largest, with a payout ratio of around 30%, it’s a fairly safe one with room to grow.

Financial strength

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) is always a solid option for TFSA investors. While there may be a bit more volatility surrounding the stock than there is Empire, TD still provides an essential service for customers in being able to safely store their money while also providing consumers with a way to obtain more of it.

The stock is also very strong financially as profits have been north of $10 billion in each of the past two years and the top bank stock is on pace for another great performance in fiscal 2019.

With impressive profits and lots of cash flow, TD is one of the best dividend stocks that you can own on the TSX as it currently pays investors around 4% per year. And with TD’s shares not showing much growth over the past 12 months, the stock could be overdue for a rally over the next 12 months, especially if a downturn doesn’t happen. And that’s why investors could be getting a good deal by locking in the stock at its current price.

High dividends

Pizza Pizza Royalty Corp (TSX:PZA) is the highest-yielding stock on the list, paying investors an impressive 9% in dividends each year. Concerns about the stock’s yield are never too far away and the good news is that the company has been generating free cash flow consistently over the past four quarters.

The bad news is that dividends paid have been more than free cash, although the gap hasn’t been big as dividends over the past four quarters have totalled $28.7 million compared to free cash flow of $27.5 million.

While the dividend yield doesn’t look to be in bad shape today, investors buying Pizza Pizza stock for its payouts are taking on some risk. Not only in the dividend potentially being cut, but with the stock not being the strongest performer, losing more than 40% of its value over the past two years.

While in 12 months it has climbed 11%, the stock has proven to be a bit volatile this year and a bad quarterly performance could sink shares of Pizza Pizza in a hurry. For now, it’s a great dividend buy, but it’s not a stock I’d recommend just buying and forgetting about.

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 David Jagielski has no position in any of the stocks mentioned. The Motley Fool owns shares of PIZZA PIZZA ROYALTY CORP.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.