Earn $5,880/Year TFSA Income That the Canada Revenue Agency Can’t Touch

Learn how you can earn almost $6,000/year in tax-free TFSA income that the Canada Revenue Agency won’t touch.

| More on:
Various Canadian dollars in gray pants pocket

Image source: Getty Images

Recently, some national news outlets were stating that the Canada Revenue Agency (CRA) was going after investors that had seen some significant gains through trading with their Tax-Free Savings Accounts (TFSAs).

Created in 2009, the TFSA provides Canadians with an opportunity to contribute upwards of $6,000 a year annually for a maximum of $69,500 starting in 2020. The gains that you make in your TFSA on investments are 100% tax-free.

The TFSA has been a huge hit over the last decade, helping people build a nest egg towards retirement that they might not have been able to before. It has also helped capitalize on the historical stock market and economic activity that continues to improve on a day-to-day basis.

At the same time, a couple of things can get you in trouble with the CRA when it comes to TFSA activity, such as overcontributing to your account or using it as a platform for more active trading than it was intended for.

Thankfully, with some strategic investments in stocks and securities poised to improve in value, your TFSA account can see significant value grow inside of it.

An industry-leading pipeline stock

Enbridge (TSX:ENB)(NYSE:ENB) is one of Canada’s leading energy infrastructure companies and has been for several years. The stock is performing extremely well in 2019, and investors are very bullish about how it’s going to perform in 2020. Over the last year, shares of ENB have provided returns of 21.97%.

Investors are excited about ENB and its prospects because of its plans to bring several major projects online between 2020 and 2022. Already responsible for transporting 25% of all the crude oil produced throughout North America, ENB is the largest Canadian natural gas distributor in the nation and only continues to get bigger and bigger as time goes on.

Combine that with dividends that are expected to grow 10% annually, and it’s easy to see why investors are so eager to add Enbridge to their portfolio. Snapping up shares of ENB now and adding them to your TFSA should provide significant returns for years to come.

Earn $5,880/year tax-free

The whole idea of using your TFSA is to grow your wealth, shield your gains from the CRA, and protect as much of your money as possible while securing your financial future.

A TFSA investor that’s able to grow their account to $100,000 with savvy and strategic moves and invest that amount in Enbridge will be able to enjoy a dividend yield of around 5.88% per year. This would mean you would get $5,880 per year in dividend income alone that the CRA can’t touch.

Summary

Your TFSA is one of the best ways for you to grow your money. But if you run amiss of the CRA by overcontributing or trading too much, the CRA can make you pay taxes on your TFSA. It’s best to avoid the taxman and invest in stocks like Enbridge to get the growth you are looking for.

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 Jason Hoang has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Enbridge.

More on Energy Stocks

Money growing in soil , Business success concept.
Energy Stocks

If You Like Cenovus Energy, Then You’ll Love These High-Yield Oil Stocks

While Cenovus Energy is a quality oil stock, its dividend yield doesn't compare to the yields of Suncor or Canadian…

Read more »

Man considering whether to sell or buy
Energy Stocks

So You Own Algonquin Stock: Is It Still a Good Investment? 

Investors who purchased Algonquin stock in 2022 are 40% in the red as the company underwent restructuring. Is it still…

Read more »

Oil pumps against sunset
Energy Stocks

How to Build a Bulletproof Monthly Passive Income Portfolio With $25,000 and WCP Stock

If you want monthly passive income, consider this stock. Here’s how to achieve all that income in the first place.…

Read more »

Clean energy
Energy Stocks

Why Cameco Stock Rose 2.95% on Tuesday

Cameco stock has stalled recently, but things might be turning around again as increased nuclear spending in the U.S. takes…

Read more »

grow dividends
Energy Stocks

If I Were You, I’d Buy These 2 Stocks Before They Skyrocket

Two stocks are poised to skyrocket in the impending comeback and bull run of the energy sector in 2024.

Read more »

oil tank at night
Energy Stocks

Why Northland Power Is a Top Energy Stock That’s Not Getting the Love it Deserves

Many investors may be wondering why Northland Power (TSX:NPI) is down so much, and here are a few reasons to…

Read more »

oil tank at night
Energy Stocks

2 Energy Stocks to Buy Hand Over Fist in March

These two rallying Canadian energy stocks can continue their bullish runs in 2024 and beyond.

Read more »

Solar panels and windmills
Energy Stocks

Dividend Investors: Top Canadian Energy Stocks for March 2024

Investors could consider top energy stocks like Enbridge for reliable dividend income.

Read more »