The federal government kept the annual contribution for a Tax-Free Savings Account (TFSA) at $6,000 in 2021. This increased the cumulative contribution room to $75,500. That is a good amount of room for investors to maneuver, no matter what their investment strategy. Today, I want to explore a dividend investing strategy. Below are three dividend stocks that have earned their all-star status in recent years. Let’s dive in.
This stock offers a strong 5.4% yield
Capital Power (TSX:CPX) is the first dividend stock I want to look at for a TFSA today. This Edmonton-based company develops, acquires, owns, and operates power generation facilities in North America. Its shares have climbed 7.9% in 2021 as of early afternoon trading on April 9. The dividend stock is up 32% from the prior year.
In Q4 2020, Capital Power delivered adjusted EBITDA of $220 million – down from $352 million from the prior year. For the full year, revenues were down marginally to $1.93 billion. However, diluted earnings per share rose to $0.77 – up from $0.72 in 2019.
TFSA investors should look to this dividend stock that still offers favourable value in the early spring. Capital Power last paid out a quarterly dividend of $0.512 per share. That represents an attractive 5.4% yield.
A dividend all-star in the surging oil space
In February, I’d suggested that investors should look to energy stocks as oil and gas prices rose. Pembina Pipeline (TSX:PPL)(NYSE:PBA) is a Calgary-based company that provides transportation and midstream services for the energy industry. Its shares have climbed 20% so far this year. The dividend stock is up 28% compared to the same time in 2020.
Total revenues came in at $1.69 billion in the fourth quarter of 2020 – down marginally from $1.75 billion in Q4 2019. For the full year, adjusted cash flow from operating activities rose to $2.28 billion over $2.23 billion over the last year. Adjusted EBITDA increased to $866 million over $787 million in Q4 2019 and jumped to $3.28 billion in 2020 – up from $3.06 billion.
TFSA investors on the hunt for a monthly stipend should pursue Pembina. The dividend stock boasts a monthly dividend of $0.21 per share. That represents a tasty 6.8% yield.
One more dividend stock to add to your TFSA in April
Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) is the last all-star dividend stock I want to look at today. It is the fifth-largest of the Big Six Canadian banks. CIBC stock has climbed 14% so far in 2021. Shares have climbed 43% from the prior year.
The bank reported adjusted net income of $1.64 billion in the first quarter of 2021. This was up 11% from Q1 2020 and 28% from the previous quarter. Adjusted diluted earnings per share delivered growth of 10% year-over-year and 28% from the fourth quarter of 2020. Canadian banks are well-positioned to gain big as the domestic and global economy recovers this year.
CIBC last paid out a quarterly dividend of $1.46 per share, which represents a solid 4.7% yield. Its shares last had a favourable P/E ratio of 13. CIBC is perfect for TFSA investors who want balanced growth, income, and good value.
On the topic of stocks to add to your TFSA . . .
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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 Ambrose O'Callaghan has no position in any of the stocks mentioned. The Motley Fool recommends PEMBINA PIPELINE CORPORATION.