TFSA Investors: 3 Stocks for Your $6,500 Limit in 2023

Top TSX dividend stocks still look cheap for a TFSA focused on passive income.

| More on:
TFSA and coins

Image source: Getty Images

The TFSA limit is $6,500 in 2023. This bumps up the total maximum TFSA contribution space per person to $88,000.

Retirees who receive Old Age Security (OAS) and income investors who find themselves in high marginal tax brackets can potentially save significant tax payments on investment earnings by holding their stocks and fixed-income investments inside their TFSA rather than in taxable accounts.

The Canada Revenue Agency does not consider TFSA earnings when calculating net world income that is used to determine the OAS pension recovery tax. That’s a big deal for seniors who have combined taxable income that is near or above the OAS clawback threshold.

The market correction in 2022 drove down the share prices of many top TSX dividend stocks. Most are now off their 12-month lows, but many still appear oversold and offer attractive yields and growing payouts.


Fortis (TSX:FTS) is a Canadian utility company with $64 billion in assets located in Canada, the United States, and the Caribbean. The firm gets 99% of its revenue from regulated businesses the generate power, move electricity, or distribute natural gas. The essential nature of the operations should mean that revenue is reliable and predictable, even during challenging economic times.

Fortis is working on a $22.3 billion capital program that will increase the rate base by an annual rate of about 6% through 2027. The resulting rise in cash flow should support targeted dividend increases of 4-6% per year over that timeframe.

Fortis has increased the payout in each of the past 49 years.

The stock trades near $55.50 at the time of writing compared to a 12-month high around $65. Investors who buy the dip can get a 4% dividend yield and look forward to steady payout growth.

Bank of Montreal

Bank of Montreal (TSX:BMO) increased the dividend by 25% when the government ended the pandemic ban on payout hikes for the Canadian banks late in 2021. The board then increased the dividend by another 4.5% when the company announced the results for the fiscal second quarter of 2022. This suggests management isn’t overly concerned about the threats posed by a potential recession.

Bank of Montreal expects to close its US$16.5 billion acquisition of Bank of the West on February 1, 2023. The deal adds more than 500 branches to the existing American operations and provides a good foothold in the California market.

BMO stock currently trades for close to $132 per share compared to $154 at the 2022 high. Investors can now pick up a 4.3% dividend yield.

TC Energy

TC Energy (TSX:TRP) operates more than 93,000 km of natural gas pipelines and 650 billion cubic feet of natural gas storage in Canada, the United States, and Mexico.

Natural gas should have a bright future as a back-up to renewable energy power. Solar, wind, and hydroelectric installations have limits due to their reliance on sunlight, wind, and water flow. Utilities also can’t ramp up renewable energy output during demand surges. As a result, gas-fired power production likely has a strong future. Natural gas emits less carbon dioxide than oil or coal when burned.

TC Energy’s share price took a beating in the past six months due to cost overruns on the Coastal GasLink pipeline project. At this point, most of the bad news should be out and the development is already 80% complete. The stock appears cheap near the current price of $58. It was as high as $74 in June. Investors can now get a 6.2% yield, and management still plans to boost the payout by 3-5% per year over the medium term.

The bottom line on top dividend stocks for a TFSA in 2023

Fortis, Bank of Montreal, and TC Energy all pay good dividends that should continue to grow. If you have some cash to put in a self-directed TFSA focused on passive income, these stocks appear 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 recommends Fortis. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker has no position in any stock mentioned.

More on Investing

Hour glass and calendar concept for time slipping away for important appointment date, schedule and deadline
Dividend Stocks

How to Build a Bulletproof Monthly Passive-Income Portfolio With Just $10,000

Here’s how to build a diversified portfolio with dividend stocks that, as a group, pay out in every month of…

Read more »

A plant grows from coins.
Dividend Stocks

Invest $10,000 in 2 TSX Stocks for $606/Year in Passive Income

Shares of these two fundamentally strong companies can start a worry-free passive income stream.

Read more »

dividends grow over time
Dividend Stocks

2 Top Dividend Stocks That Keep Raising Their Payouts

In addition to their solid dividend growth track record, these top dividend stocks also offer strong growth potential for the…

Read more »

Various Canadian dollars in gray pants pocket

3 No-Brainer Stocks to Buy Under $50

Investing in a core portfolio needs no-brainer stocks you can invest in at any time. These stocks you can buy for…

Read more »

data analytics, chart and graph icons with female hands typing on laptop in background

RRSP Pension: 2 Dividend Stocks to Buy on the Latest Dip

These top TSX dividend stocks now offer high yields.

Read more »

People walk into a dark underground mine.
Metals and Mining Stocks

How to Turn Your TFSA Into a Gold (or Copper) Mine Starting With $10,000  

These two top stocks can turn any TFSA into a gold mine -- or a copper mine, if you really…

Read more »

Dots over the earth connecting the world
Stocks for Beginners

Emerging Markets: Opportunities for High Returns in 2024

Are you looking for growth this year? Emerging markets could be one of the best areas to seek out high…

Read more »


My Top 5 TSX Stocks to Buy Right Now for Massive Returns in a Decade

These five TSX stocks have impressive operations and solid growth potential, making them five of the best to buy now.

Read more »