TFSA Investors: 2 Dividend Stocks to Buy and Hold for the Long Term

Why stress about the markets when you can just sit back and invest in these safe, income-generating investments?

| More on:
Various Canadian dollars in gray pants pocket

Image source: Getty Images

Finding good dividend stocks to put inside of a tax-free savings account (TFSA) isn’t always easy. Some stocks don’t pay much while others could be risky investments to hang on to. Enbridge, for instance, pays a high yield but investors may not want the exposure to a struggling oil and gas industry. There’s no shortage of income-paying stocks that slashed or suspended their payouts last year, especially from that sector.

TFSA investors are better off keeping things simple and investing in companies with bright futures that pose little risk. The good news is that there are a couple of solid stocks on the TSX that can help you do just that:

Jamieson Wellness

Vitamin maker Jamieson Wellness (TSX:JWEL) is a top dividend stock to own even though it doesn’t offer that great of a yield. At 1.4%, you can find higher-paying dividend stocks out there but Jamieson’s stability and long-term success is why this is a worthwhile investment to put into your TFSA. Its payout ratio is below 50% and for dividend investors, that’s important as it means that not only does the dividend look safe but there’s also room for it to increase.

Jamieson’s business has also been doing well during the pandemic, posting $283.3 million in sales over the nine-month period ending September 30, 2020 for a year-over-year increase of 17.2%. Its net income of $26.2 million over that period is also up 41.6% from a year ago. As people are growing concerned about healthcare and their general well-being, they’re turning to vitamins and other health products. And that’s a trend that may not die down anytime soon.

In the past 12 months, shares of Jamieson are up 35%, and there could be more gains to come over the long term. TFSA investors have a great opportunity to profit not just from the stock’s dividend, but also if it continues to rise in value.

Maple Leaf Foods

Investors can earn a bit of a higher yield with food manufacturer Maple Leaf Foods (TSX:MFI). Currently, the stock yields 2.6% and although its payout ratio is higher at 74%, it’s still manageable and shouldn’t concern investors. The company has posted a profit in four of the last five quarters and over the past three periods its sales are up 8.5%, while profits have soared 53.8%.

The company is generating growth from both its meat protein group (which makes up the bulk of revenue) and its plant protein division, which includes its Lightlife brand.

Although its profit margins aren’t great at around 3%, Maple Leaf Foods can still make for a good investment for the long term. Its strong brands and the prevalence of the company’s products in supermarkets across the country ensure that its sales should remain fairly consistent over time. In 2019, its revenue of $3.9 billion grew 12.8% year over year and the last time its top line was below $3.5 billion was 2016.

Shares of Maple Leaf Foods are down around 4% from where they were a year ago, and now could be a good opportunity to buy the stock.

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 and recommends Enbridge.

More on Dividend Stocks

Dividend Stocks

1 Oversold Dividend Stock I’d Buy in December 2022

Here’s one of the best Canadian dividend stocks to buy in December that I find undervalued.

Read more »

Make a choice, path to success, sign
Dividend Stocks

Algonquin Power Stock: Time to Buy or Buyer Beware?

Algonquin Power stock has a massive 9.5% dividend yield. It looks appealing, but is it time to buy or beware?

Read more »

TFSA and coins
Dividend Stocks

2 Top TSX Stocks to Buy Now for TFSA Passive Income

Stocks with good dividend growth are now on sale for investors seeking passive income.

Read more »

Dividend Stocks

2 TSX Stocks to Buy in December for Passive Income

These two TSX dividend stocks are some of the best to buy today and can offer years of growing passive…

Read more »

Increasing yield
Dividend Stocks

2 High-Yield Dividend Stocks You Could Hold for Years

You can consider adding these two large-cap Canadian dividend stocks to your portfolio now to hold for the long term.

Read more »

Female hand holding piggy bank. Save money and financial investment
Dividend Stocks

How to Turn a $10,000 TFSA or RRSP Into $415,000 for Retirement

This investing strategy has made some patient investors quite rich.

Read more »

edit Business accounting concept, Business man using calculator with computer laptop, budget and loan paper in office.
Dividend Stocks

3 Essential Stocks I’d Buy No Matter the Price

These essential stocks aren't just good options right now; they're stable choices for decades for investors looking to set up…

Read more »

Growth from coins
Dividend Stocks

TFSA Investors: Buy and Forget This Top Oversold Dividend Stock

This dividend stock has seen shares collapse this year, with a poor year expected. But does that mean it's a…

Read more »