TFSA Investors: Make $400 Cash Every Year From a $6,500 Investment

Here are some of the best dividend stocks for TFSA investors.

| More on:
Canadian Dollars

Image source: Getty Images

As markets are expected to remain volatile in 2023, it makes sense to stay defensive. And it does not mean you will have to make a big compromise on returns when you are high on defensives. Rather, these safe and less-volatile names will provide stability and stable dividends every year.

And if you are investing via TFSA (Tax-Free Savings Account), the capital gain and dividends will be tax free. The long-term effect of holding stocks in TFSA is quite remarkable, as no money is lost in taxes, and compounding takes place in full.

So, here are three top dividend-paying TSX stocks for your TFSA.


Canadian energy midstream giant Enbridge (TSX:ENB) offers handsome dividends. It yields some of the highest 6.6% and has raised shareholder payouts for the last 28 consecutive years. So, if you invest $6,500 in ENB, it will make $430 in dividends every year. As the company increases its profits, Enbridge will likely raise shareholder payouts as well.

As crude oil prices increase, oil-producing companies make money. Thus, oil-producing stocks have a moderate positive correlation with oil prices. On the flip side, they also fell when oil prices tumbled. In case of Enbridge, it has a much lower correlation with oil prices, which makes it much less volatile. This explains its relative underperformance, where ENB stock has returned 16%, while TSX energy stocks have returned 50% this year.

However, Enbridge’s dividend reliability stands notably tall. It makes money from fixed-fee, long-term contracts, which facilitates dividend stability.


BCE (TSX:BCE) is another name with a rich dividend profile. It yields 6.1%, way higher than TSX stocks at large. Investing $6,500 in BCE stock will make $397 in dividends annually.

Telecom companies earn stable cash flows from their large, regulated operations. So, when high-growth companies experience earnings decline amid economic downturns, companies like BCE play well and outperform. In the last 10 years, BCE’s net income has increased by 2%, compounded annually. The stock has returned 9% compounded annually in this period, thanks to its consistently growing dividends.

The Canadian telecom industry is an oligopoly with a market share of almost equally divided between three top players. BCE has the second-largest wireless subscriber base and dons a relatively superior balance sheet. Its earnings and dividend stability stand tall in volatile markets and will likely play well for the long term.


Utility stocks are classic recession plays as they keep growing steadily, even during economic downturns. Fortis (TSX:FTS) is one of the top utility stocks with a stable dividend profile. It currently yields 4%, which is in line with its peers.

Fortis has seen several recessions in the past and has kept its dividend-growth streak intact. This indicates its earnings visibility and dividend stability. So, it will likely keep raising shareholder payouts, even if a recession comes in 2023.

FTS has returned a negative 5% in 2022 amid rapidly rising interest rates. However, it will likely outperform in the long term, as the interest rate hike cycle reverses.

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 and Fortis. The Motley Fool has a disclosure policy. Fool contributor Vineet Kulkarni has no position in any of the stocks mentioned.

More on Dividend Stocks

A worker drinks out of a mug in an office.
Dividend Stocks

1 Dividend Stock to Buy if the Bank of Canada Keeps Cutting Rates 

This dividend stock is sure to benefit from ongoing cuts in the key interest rate and is already seeing some…

Read more »

A close up image of Canadian $20 Dollar bills
Dividend Stocks

How Much Cash Do You Need to Quit Work and Live Off Dividend Income

Toronto-Dominion Bank (TSX:TD) pays a lot of dividend income. Can you live off of it in retirement?

Read more »

An analyst uses a computer and dashboard for data business analysis and Data Management System with KPI and metrics connected to the database for technology finance, operations, sales, marketing, and artificial intelligence.
Dividend Stocks

Invest $10,000 in This Dividend Stock for $1,398.40 in Passive Income 

This dividend stock offers a whopping 11.9% dividend yield right now, with returns that should fly high for this cyclical…

Read more »

Person holds banknotes of Canadian dollars
Dividend Stocks

This 6.1 Percent Dividend Stock Is My Pick for Instant Income

Here’s what makes Transcontinental one of my top dividend stock picks right now for instant income.

Read more »

Pile of Canadian dollar bills in various denominations
Dividend Stocks

For a Shot at $5,000/Year in Passive Income, Buy 1,000 Shares of This TSX Stock

Do you know you can build passive income with TSX stocks? A $22,000 investment can give you a shot at…

Read more »

Paper Canadian currency of various denominations
Dividend Stocks

Beat the TSX With This Cash-Gushing Dividend Stock

A new Canoe EIT Income Fund (TSX:EIT.UN) investment could earn almost 9% yield annually, and the monthly dividend stock has…

Read more »

RRSP (Registered Retirement Savings Plan) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

RRSP Wealth: 2 Great Dividend Stocks to Own for Total Returns

Dividend stocks like Fortis Inc (TSX:FTS) can be great additions to a well-diversified portfolio.

Read more »

edit Sale sign, value, discount
Dividend Stocks

3 Cheap Stocks to Add to Your TFSA Before They Get Expensive

The stock market has some lucrative TFSA stocks trading at multi-year lows. Now is a good time to buy these…

Read more »