TFSA Investors: Earn Over $5,400/Year Passive Income by Investing in These 4 TSX Stocks

These four TSX stocks offer safe dividends with higher yields.

| More on:
Profit dial turned up to maximum

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

Through the Tax-Free Savings Account (TFSA), Canadian citizens can earn tax-free returns on a specified amount called contribution room. For 2021, the Canada Revenue Agency (CRA) has kept the contribution room unchanged at $6,000, increasing the cumulative contribution room to $75,500. If you invest the entire amount in dividends stocks with yields above 7.2%, you can earn a passive income of above $5,400 every year. Meanwhile, here are the four TSX stocks with their yields currently standing above 7.2%.

Enbridge

Enbridge (TSX:ENB)(NYSE:ENB) has been paying dividends uninterruptedly for the last 66 years. Meanwhile, it has raised its dividends consecutively over the previous 26 years at a CAGR of 10%. The company operates a low-risk, highly regulated business that generates stable and predictable cash flows, allowing it to raise its dividends consistently.

Meanwhile, Enbridge’s management has planned to put $10 billion worth of projects into service this year and deliver $100 million of cost savings. These initiatives could drive the company’s earnings and cash flows in 2021. Enbridge has raised its 2021 dividends by 3% to $3.34, with its dividend yield currently standing at 7.6%. Given its splendid track record, stable cash flows, and high dividend yield, Enbridge is a good buy for income-seeking investors.

Keyera

The energy sector’s weakness amid the pandemic has impacted Keyera (TSX:KEY). In its recently reported fourth-quarter earnings, the company’s adjusted EBITDA had declined by 35.7%. Meanwhile, it has taken several cost-cutting initiatives, which could yield results in 2021. Further, the increased oil demand amid improvement in economic activities could drive Keyera’s financials in the coming quarters.

Meanwhile, Keyera has a healthy record of raising its dividends. It has increased its dividends uninterruptedly since 2008 at a CAGR of 9%. The company currently pays monthly dividends of $0.16 per share, with its forward dividend yield standing at 7.4%. Its payout ratio stood at 59%. So, the company has more room to raise its dividends. Further, its financial position also looked healthy, with its liquidity standing at $1.2 billion.

Pembina pipeline

Supported by its low-risk, highly contracted business, Pembina Pipeline (TSX:PPL)(NYSE:PBA) has raised or maintained its dividends for the last 22 years. Meanwhile, in the previous decade, the company has raised its dividends at a CAGR of 4.2%. The company is currently paying monthly dividends of $0.21 per share with a forward dividend yield of 7.2%.

The recovery in the energy sector amid the expansion of the vaccination program could drive Pembina Pipeline’s financials in the coming quarters. The company’s management expects its 2021 adjusted EBITDA to range from $3.2 to $3.4 billion. Its liquidity position also looks healthy at $2.54 billion as of September 30. So, given its healthy liquidity position and stable cash flows, I believe its dividends are safe.

Extendicare

My final pick would be Extendicare (TSX:EXE), which provides care and services to senior citizens across Canada under various brands. The company’s financials were under pressure this year, as the pandemic-related operating expenses hurt its margins. However, its long-term growth potential looks promising.

Canada’s senior population is growing and could shoot up in the coming decade, driving the demand for Extendicare’s services. The company has also started the construction of a 256-bed long-term-care home in Sudbury. Further, it has initiated a caregiver training program, which could mitigate the increasing shortage of personal support workers. So, given the company’s high-growth prospects, I believe the company’s dividends are safe. It pays monthly dividends of $0.04 per share, representing an annualized payout of $0.48 per share and a forward dividend yield of 7.5%.

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.

The Motley Fool owns shares of and recommends Enbridge. The Motley Fool recommends KEYERA CORP and PEMBINA PIPELINE CORPORATION. Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned.

More on Dividend Stocks

Dots over the earth connecting the world
Dividend Stocks

3 of the Top-Growing Stocks on Earth

Market volatility remains high in Q3 2022, but it’s easy to identify the top-growing stocks on Earth.

Read more »

Profit dial turned up to maximum
Dividend Stocks

1 Undervalued Canadian Dividend Stock to Buy for TFSA Passive Income and Total Returns

This cheap Canadian energy stock provides an attractive dividend yield for TFSA passive income and a shot at some big…

Read more »

money cash dividends
Dividend Stocks

Want Passive Income? 1 TSX Stock for $8/Day in Dividends

If you need cash right away, then this TSX stock can make you passive income from a stable dividend that…

Read more »

edit Balloon shaped as a heart
Dividend Stocks

My 3 Favourite TSX Dividend Stocks Right Now

Canadian dividend stocks make for great long-term buy-and-hold investments.

Read more »

value for money
Dividend Stocks

3 Incredibly Cheap Dividend Stocks to Buy for Dependable Passive Income

Now is an excellent time to load up on Canadian dividend stocks. Here are top picks that are all trading…

Read more »

A close up image of Canadian $20 Dollar bills
Dividend Stocks

3 Simple TSX Stocks to Buy With $25 Right Now

Canadians with capital of as low as $25 can purchase three simple stocks right now and earn recurring passive income…

Read more »

edit Person using calculator next to charts and graphs
Dividend Stocks

2 No-Brainer U.S. Stocks for Investors in August

Here are two undervalued U.S. stocks to diversify your investment portfolio. They both pay safe and growing dividends!

Read more »

Growth from coins
Dividend Stocks

1 Dividend Juggernaut That Could Grow Fast in a Recession

Restaurant Brands International (TSX:QSR)(NYSE:QSR) stock looks way too cheap to ignore, even going into an economic downturn.

Read more »