The Tax-Free Savings Account (TFSA) is set to increase its contribution limit by $6,500 in 2023. That means Canadian investors who were 18 years (or older) in 2009 can contribute a grand total of $88,000 into their TFSA next year.
Any opportunity to maximize tax efficiency should be utilized by Canadian investors. Over a lifetime, you can save thousands of tax dollars by simply investing through your TFSA.
Turn $70,000 into $320 of tax-free monthly income
If you are more inclined to invest for passive income, the TFSA is a great place to hold your stock investments. While we recommend a widely diversified portfolio (at least 8 to 10 stocks), here is a simple three-stock portfolio that demonstrates the level of dividends you can collect from Canadian stocks today. If you put $70,000 to work, it could earn an average of $320 per month of tax-free passive income.
A real estate stock for your TFSA
At a price of $11.65 today, Dream Industrial Real Estate Investment Trust (TSX: DIR.UN) pays an attractive 5.87% dividend yield. If you put $23,333 into this real estate stock, you would earn $116.72 of monthly distributions.
With interest rates rising, real estate stocks have been on the decline. Dream Industrial stock is down 32.6% in 2022.
Unfortunately, this masks Dream’s high-quality portfolio of warehousing and distribution properties. The company has delivered 99% occupancy, a strong rental rate growth, and +10% funds from operations per unit growth this year.
Dream has a very good balance sheet and capital flexibility even though interest rates are rising. Likewise, its dividend is well-covered by the cash flows it collects. Today, it trades at a severe discount to its private market value so it is an attractive stock if you can look out several years ahead.
A top TFSA renewable power stock
Renewable energy stocks have recently pulled back significantly. That presents a good opportunity to upgrade your portfolio in the segment. One of the best quality renewable stocks you can buy is Brookfield Renewable Partners (TSX: BEP.UN).
It has fallen 20.5% in 2022. Investors can buy the stock for $36 per share and get a nice 5.65% dividend yield. A $23,333 investment would earn $278.21 per quarter or $92.74 averaged monthly.
Brookfield Renewables is a world leader in renewable energy. It has an anchor portfolio of coveted hydro power assets that are complimented by a growing pipeline of wind, solar, distributed generation, battery, and even nuclear power projects. Its large development pipeline should fuel decades of relatively low-risk, high single-digit growth ahead.
An energy stock with a fast-growing dividend
If you want an off-handed way to play oil stocks in your TFSA, Topaz Energy (TSX: TPZ) could be a good income stock. At $20.89, this stock could earn a 5.8% dividend yield in your TFSA. A $23,333 investment could earn $335.70 every quarter or $111.91 averaged monthly.
Topaz owns very well-located royalty and energy infrastructure assets in Western Canada. It was spun out of Tourmaline Oil in late 2019. Since its inception, its dividend has risen by 50%! In fact, it has increased its dividend five times since June 2021.
The company has made several acquisitions in areas of fast-growing energy production. Given low supply and growing energy demand, Topaz should continue to grow its dividend by a substantive rate in the years ahead.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| Dream Industrial REIT | 11.65 | 2002 | $0.05833 | $116.72 | Monthly |
| Brookfield Renewable Partners | 36.06 | 647 | $0.43 | $278.21 | Quarterly |
| Topaz Energy | 20.85 | 1,119 | $0.30 | $335.70 | Quarterly |
