2 Top Stocks to Buy Now for Passive Income

Worried about inflation? These top high-yield TSX dividend stocks look attractive to buy for a TFSA focused on passive income.

| More on:
edit Person using calculator next to charts and graphs

Image source: Getty Images.

Retirees and other investors are trying to find ways to protect their savings against rising inflation. One strategy to mitigate the impact involves owning top high-yield dividend stocks inside a TFSA. The distributions are tax free and won’t put Old Age Security (OAS) pension payments at risk of the 15% OAS clawback.


Enbridge (TSX:ENB)(NYSE:ENB) has raised its dividend in each of the past 27 years, and the board increased the quarterly payout by 3% to $0.86 per share for 2022. The hike isn’t as large as long-term investors are accustomed to seeing, but Enbridge is also using excess cash to buy back shares. In fact, the new share-repurchase program has $1.5 billion set aside to buy back outstanding stock.

Management is targeting 5-7% growth in distributable cash flow through 2024. EBITDA is expected to increase by roughly 9% in 2022 compared to last year. Looking ahead, Enbridge is planning to spend as much as $6 billion per year over the medium term on capital projects. That should support steady cash flow and dividend growth beyond 2024.

The rebound in the energy industry bodes well for Enbridge’s oil and natural gas pipeline operations. Enbridge also invested in a new oil export terminal last year and is positioned well to provide carbon sequestration and storage services to energy firms and other businesses with high emissions.

Investors who buy the stock today can pick up a 6% dividend yield. That’s above the 5.7% inflation rate reported by Statistics Canada for February.


BCE (TSX:BCE)(NYSE:BCE) recently raised its dividend by 5.1%. The communications giant has the size and balance sheet strength to invest the billions of dollars needed to make sure customers have access to the broadband capacity they need for business or entertainment across a variety of platforms.

BCE continues to run fibre optic lines right to the premises of its customers. This helps protect its large competitive moat. BCE also spent $2 billion last year on new spectrum that will be the foundation for the expansion of its 5G network. These capital initiatives will help drive new revenue opportunities in the coming years.

BCE spent the past decade building a powerful media business. The pandemic hit this division, as advertisers cut spending, and sports teams found themselves playing in front of empty seats. The rebound in the economy and the return of full arenas will boost revenue for the media business in 2022.

At the same time, lucrative mobile roaming fees should increase this year, as people travel more for vacation and business.

BCE is a good stock to own if you want to get reliable and growing payouts without having to worry about volatility in global financial markets. The company is focused on the Canadian market and provides essential services that are required in all economic conditions.

The stock has pulled back from the 2022 high, giving investors a chance to buy BCE on a dip. At the current share price near $68, new investors can pick up a solid 5.4% dividend yield.

The bottom line on top stocks for high-yield passive income

Enbridge and BCE are leaders in their respective industries. The companies enjoy strong competitive advantages and generate adequate cash flow to support their generous payouts. If you have some cash to put to work in a TFSA focused on passive income, these stocks deserve to be on your radar today.

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 recommends Enbridge. Fool contributor Andrew Walker owns shares of Enbridge and BCE.

More on Dividend Stocks

Specialty Brands faces higher raw materials costs.
Dividend Stocks

What’s Next for Premium Brands Stock?

Shares of the specialty food production and distribution company have fallen about 25% since last October.

Read more »

Double exposure of a businessman and stairs - Business Success Concept
Dividend Stocks

2 Interesting Buys in Any Market

Here are two intriguing buys in any market climate that offer defensive appeal as well as growth and income earning…

Read more »

Dividend Stocks

TFSA Investors: 3 TSX Stocks for Tax-Free Passive Income

These Canadian corporations have strong visibility over future earnings and dividend payouts.

Read more »

Simple life style relaxation with Asian working business woman healthy lifestyle take it easy resting in comfort hotel or home living room having free time with peace of mind and self health balance
Dividend Stocks

Lazy Landlords: 3 Cheap Canadian REITs to Buy in May 2022

You can become a passive landlord today by investing in Canadian REITs. Here are three cheap REITs to consider this…

Read more »

Target. Stand out from the crowd
Dividend Stocks

4 High-Yield TSX Stocks to Buy Ahead of Their Ex-Dividend Dates

If you have some cash lying idle, consider these high-yielding TSX stocks.

Read more »

growing plant shoots on stacked coins
Dividend Stocks

Passive Income: 3 TSX Stocks With Rapidly Growing Dividends

Worried about inflation? Here are three passive-income stocks to buy that pay rapidly growing dividends.

Read more »

Family relationship with bond and care
Dividend Stocks

Retirees: 4 Safe Stocks to Buy for Decent Passive Income

Retirees can offset the impact of runaway inflation by buying safe dividend stocks to create more cash flows.

Read more »

Canadian energy stocks are rising with oil prices
Dividend Stocks

3 Canadian Energy Stocks to Buy for Reliable Passive Income

Canadian energy stocks are gushing cash. Here's three top stocks that are perfect buys for reliable passive income.

Read more »