3 Dividend Stocks Every TFSA Investor Needs

Dividend stocks belong in any TFSA portfolio, but these three are solid options for investors seeking stable, long-term income for life.

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published January 14, 2022 10:00 am EST

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The Tax-Free Savings Account (TFSA) has to be one of the best, if not the best, savings accounts for dividend stocks. Not only are you able to invest in strong companies, but you can bring in extra cash each quarter and sometimes each month tax free.

But that doesn’t make your decision an easy one. There are so many great dividend stocks out there. But the key is finding the ones that will provide long term, stable income.

So, today, I’m going to look at the top three dividend stocks I’d recommend for absolutely anyone’s TFSA.

Nutrien

Nutrien (TSX:NTR)(NYSE:NTR) may not be the oldest of the dividend stocks, but it’s certainly one of the strongest. Nutrien cornered the market of crop nutrients, becoming the world’s largest producer. This has been done through the oldest game in the book: acquisitions.

But during the pandemic, dividend stocks like Nutrien found more opportunity through its e-commerce arm. In fact, Nutrien managed to deliver record earnings during its latest quarter, increasing its full-year guidance in the process. And as the world continues to fight for arable land, Nutrien will continue to be a strong contender for one of the top dividend stocks to own.

Motley Fool investors can pick up Nutrien, as it trades at a stable 18 times earnings. It offers a 2.37% dividend yield, or $2.32 per share per year.

CIBC

One of the top dividend stocks to own offers the highest of the dividend yield among the Big Six banks. The banking sector is always a strong one to have in your TFSA portfolio. But if you want dividends, then Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) is the one you want.

CIBC has long been the highest dividend among the batch. But it’s also been shaking things up lately, changing its logo for the first time in over two decades. It’s also eyeing the future, putting aside $100 million towards climate tech and energy transition funds. It’s managed to do quite well, even when the Canadian economy has been down, especially with housing remain so strong.

CIBC is one of the dividend stocks Motley Fool investors would do well to add to their long-term TFSA portfolio. That’s especially as it offers a 4% dividend yield of $6.44 per share per year and trades at a valuable 11.7 times earnings.

CP Rail

Although Canadian Pacific Railway (TSX:CP)(NYSE:CP) doesn’t have the highest yield out there, it certainly is a strong choice for your TFSA. CP has grown its dividend year after year, demonstrating how far it’s come since 2012. It took its spending in hand and recently put it to good work by buying up Kansas City Southern Railway.

CP now boasts being the largest railway in North America. While it has a debt to pay, it has the funds to meet expectations. Further, it will see revenue skyrocket, as it now has more access to oil and agriculture. Long-term investors will certainly benefit from having these kind of dividend stocks in their TFSAs. And CP is one of my top choices.

CP currently trades at 20.63 times earnings and offers a 0.80% dividend yield. So, yes, it’s not that large. But it’s stable, with income coming in for decades and planned for decades more. That’s something Motley Fool investors can take to the bank again and again.