TFSA Investors: 2 Great TSX Stocks to Buy for Passive Income

TFSA investors can find top TSX dividend stocks to buy at cheap prices today for a portfolio focused on passive income.

| More on:
work from home

Image source: Getty Images

Retirees and other Tax-Free Savings Account (TFSA) investors seeking reliable tax-free passive income have an opportunity to buy top TSX dividend stocks at undervalued prices.

TD Bank

TD (TSX:TD)(NYSE:TD) just reported fiscal third-quarter (Q3) 2022 results that show the bank is still performing well, despite the current economic challenges. TD delivered adjusted net income of $3.81 billion for the quarter compared to $3.63 billion for the same period last year. In the first nine months of fiscal 2022, TD generated $11.36 billion in adjusted net income compared to $10.78 billion in 2021, so the bank is on track to beat the results from last year.

TD raised the dividend by 13% near the end of 2021. The bank has a strong track record of dividend growth supported by rising revenue and higher profits. In fact, TD’s compound annual dividend-growth rate is about 11% over the past 25 years.

This is expected to continue. TD built up significant excess cash over the past two years and is using the funds to make strategic acquisitions in the United States to drive future growth. TD is buying First Horizon for US$13.4 billion in a deal that will make TD a top-six retail bank in the American market. TD is also purchasing Cowen, an investment bank, for US$1.3 billion.

TD stock trades near $85.50 at the time of writing compared to $109 earlier this year. The current dividend provides a 4.1% yield.


BCE (TSX:BCE)(NYSE:BCE) is Canada’s largest communications company with a current market capitalization near $59 billion. The stock currently trades around $64.50 compared to a high of $74 it hit in April this year. BCE stock looks oversold right now and offers investors a solid 5.7% dividend yield.

The company reported solid Q2 2022 results driven by strong subscriber growth. BCE is attracting new mobile customers while also reducing turnover of existing postpaid mobile clients. Wireless operating revenue increased 5.5% in the quarter.

BCE’s media business continued its recovery from the pandemic. The group’s operating revenue increased 8.7% in Q2 compared to the same period last year. Of note, digital revenue jumped 55%, supported by Crave streaming subscriptions. Advertising expenditures also improved in the specialty TV sports and news services. In addition, BCE’s radio stations are benefitting from higher ad demand.

Across the entire business, adjusted net earnings rose 5.3% compared to Q2 2021. Free cash flow increased 7.1%. BCE confirmed its 2022 financial guidance of adjusted earnings per share growth in the 2-7% range. Free cash flow growth is expected to be 2-10%. This should support a solid dividend increase for 2023.

BCE raised the dividend by 5% for 2022 and has increased the payout by at least that much annually for 14 years.

The bottom line on top stocks to buy for passive income

TD and BCE have strong track records of dividend growth that should continue in the coming years. If you have some cash to put to work in a TFSA focused on passive income, these stocks look cheap today and deserve to be on your radar.

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 has no position in any of the stocks mentioned. Fool contributor Andrew Walker owns shares of BCE.

More on Dividend Stocks

Target. Stand out from the crowd
Dividend Stocks

3 Monthly-Paying Dividend Stocks That Are Screaming Buys Right Now

These three monthly-paying dividend stocks are excellent additions to your portfolios.

Read more »

Growing plant shoots on coins
Dividend Stocks

TFSA Set and Forget: 1 Dividend-Growth Superstar for the Long Run

Manulife Financial (TSX:MFC) stock is in the zone, with dividend hikes and big buybacks likely in the cards.

Read more »

little girl in pilot costume playing and dreaming of flying over the sky
Dividend Stocks

For a Shot at $6,228/Year in Passive Income, Buy 755 Shares of This TSX Stock

Looking for passive income? You'll need to look beyond only dividends. Which is why EIF stock could be one of…

Read more »

Piggy bank with word TFSA for tax-free savings accounts.
Dividend Stocks

TFSA Investors: 2 Dividend Stocks I’d Buy and Hold Forever

These two stocks could provide long-term investors multi-year returns of more or less 10% per year

Read more »

crypto, chart, stocks
Dividend Stocks

Why Waste Connections Stock Keeps Going Up

Waste Connections stock (TSX:WCN) continues to hit all-time highs. But is more on the way, or is an investment wasteful?

Read more »

Money growing in soil , Business success concept.
Dividend Stocks

A Dividend Giant I’d Buy Over Suncor Stock

Suncor Energy is a blue-chip TSX dividend stock that offers you a tasty yield. But this TSX dividend giant is…

Read more »

Two seniors walk in the forest
Dividend Stocks

Passive Income Investors: The Best Bargain to Buy in June

Passive income investors shopping for stocks to own this month will be hard-pressed to find two better options that can…

Read more »

Dividend Stocks

Love Real Estate? 3 Top TSX REITs to Watch in June

For investors seeking exposure to real estate investment trusts, or REITs, here are three top Canadian options to consider buying…

Read more »