TFSA Investors: 3 Dividend Stocks to Buy Today

Northwest Healthcare REIT, Enbridge stock, and Pembina Pipeline stock are stock picks for investors looking to generate dividend income in their TFSAs.

| 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

The Tax-Free Savings Account (TFSA) has become an increasingly popular financial vehicle for Canadian investors to help them achieve a wide range of short-, medium-, and long-term financial goals. The account offers tax-sheltered growth for investors, allowing investors to generate returns from their investments in the account without incurring any taxes for the Canada Revenue Agency (CRA) to collect.

The government began the TFSA to encourage better savings practices among Canadians. With each passing year, the CRA increases the contribution room in the account. After the 2021 update, the cumulative TFSA contribution room since its inception is $75,500.

You can use the contribution room to hold cash inside your TFSA to generate interest income. However, a far better way to use the TFSA could be to use it to create a portfolio of income-generating assets that consistently keep adding more cash to your account balance. Provided you make the right stock picks, you can create a substantial passive-income stream that can offer you the opportunity to become a much wealthier investor in the long run.

I will discuss three dividend stocks that you could buy today and hold in your TFSA for this purpose.

Northwest Healthcare Properties REIT

Northwest Healthcare Properties REIT (TSX:NWH.UN) can be an excellent choice for your TFSA portfolio because it pays monthly dividends. The company owns, develops, and operates a diverse portfolio of healthcare properties throughout Canada, Europe, Brazil, and several other countries. NWH plans to expand its presence in Europe through acquisitions in the Netherlands. It also plans to fully acquire the Australian Unity Healthcare Property Trust to establish a strong presence in Australia.

Its properties enjoy a prolific 97% occupancy rate. Its rent-collection rate is over 98%, allowing the REIT to generate predictable and consistent cash flows to fuel its growth and fund its monthly payouts.

Enbridge

Enbridge (TSX:ENB)(NYSE:ENB) is an energy infrastructure company that has seen rough times during the pandemic but managed to retain its 26-year dividend-growth streak. The company has been paying shareholders their dividends for the last 66 years without interruptions.

Generating most of its cash flows through long-term contracts or rate-regulated assets, Enbridge is a midstream energy infrastructure company that managed to offset the uncertainty brought on by volatile commodity prices during the pandemic. Its stable cash flows allowed the company to increase its payouts to shareholders comfortably.

The company plans to invest $17 billion in the next couple of years to expand its regulated assets and provide a further boost to its cash flows, making it an ideal asset to consider adding to your dividend income portfolio.

Pembina Pipeline

Pembina Pipeline (TSX:PPL)(NYSE:PBA) can be another excellent stock pick for your dividend income portfolio, as the oil demand continues to surge. Oil prices have started increasing with several global economies reopening, and the rising demand for air travel. The energy transportation company can generate better returns, as its asset-utilization rate improves amid the rising demand.

The company is currently focusing on acquiring Inter Pipeline. The deal could become a massive boon for Pembina Pipeline, allowing it to expand opportunities to generate more cash flow while providing significant cash savings. Considering its growth prospects and industry tailwinds, it could be an ideal asset to own for the long run.

Foolish takeaway

You can create a portfolio of dividend stocks in your TFSA to generate passive income that can supplement your active income. You can also reinvest the dividends to unlock the power of compounding and accelerate your wealth growth for your retirement nest egg. The possibilities are endless.

Pembina Pipeline stock, Enbridge stock, and Northwest Healthcare Properties REIT could be ideal additions to your TFSA portfolio to help you achieve your investment goals.

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 Adam Othman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Enbridge. The Motley Fool recommends NORTHWEST HEALTHCARE PPTYS REIT UNITS and PEMBINA PIPELINE CORPORATION.

More on Dividend Stocks

edit Back view of hugging couple standing with real estate agent in front of house for sale
Dividend Stocks

Why Real Estate Stocks Are a No-Brainer Addition to Your Portfolio

Real estate stocks, especially REITs, offer some distinct advantages over other types of stocks, making them must-have additions to most…

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

3 Top TSX Dividend Stocks to Buy for Monthly Passive Income

Top TSX stocks with monthly dividends now trade at cheap prices for investors seeking passive income.

Read more »

Canadian Dollars
Dividend Stocks

Create Free Passive Income and Turn it Into Thousands With 1 TSX Stock

If you can't afford to invest, you can certainly create passive income another way and use that to invest in…

Read more »

Payday ringed on a calendar
Dividend Stocks

Canadian Dividend Investors: 2 ETFs That Pay Monthly Income With High Yields

Dividend ETFs often pay out monthly distributions compared to dividend stocks.

Read more »

think thought consider
Dividend Stocks

2 Stocks I Own and Will Buy More of if They Fall

Stocks tend to go up in the long run. Therefore, buying a basket of diversified stocks on dips should lead…

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

2 Oversold TSX Dividend Stocks to Buy for Passive Income

Blue-chip dividend stocks such as Royal Bank of Canada and Manulife Financial pay investors a tasty forward yield.

Read more »

TFSA and coins
Dividend Stocks

TFSA Passive Income: 3 Solid Stocks to Earn $355 Every Month

Looking to earn steady passive income? Here are three solid TSX stocks that can help you earn a worry-free passive…

Read more »

Technology
Dividend Stocks

RRSP Investors: 2 Stocks to Buy in August for Dividends and Capital Gains

RRSP investors can still find top TSX dividend stocks trading at cheap prices today for a buy-and-hold portfolio.

Read more »