The Tax-Free Savings Account (TFSA) is a popular registered account in Canada. One of the most important features of the TFSA is that any returns generated from qualified investments held in the account will be exempt from Canada Revenue Agency taxes. Typically, the TFSA can hold a variety of asset classes, including stocks, bonds, exchange-traded funds, and mutual funds.
Introduced back in 2009, the cumulative TFSA contribution room has increased to $88,000 this year. So, for TFSA couples, the maximum TFSA contribution will double to $176,000. If you haven’t already, consider using this room to buy and hold a portfolio of quality dividend-paying stocks. Investing in dividend stocks can help you generate a steady stream of dividend income and benefit from long-term capital gains.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| Enbridge | $51.25 | 687 | $0.888 | $610 | Quarterly |
| Brookfield Renewable | $36.89 | 954 | $0.45 | $429 | Quarterly |
| Fiera Capital | $9.20 | 3,826 | $0.215 | $822 | Quarterly |
| Bank of Nova Scotia | $71.57 | 492 | $1.03 | $507 | Quarterly |
| Brookfield Infrastructure | $46.52 | 757 | $0.52 | $396 | Quarterly |
Let’s see how TFSA couples can use this room to earn $11,000 in tax-free annual income by purchasing the below TSX stocks.
Enbridge
One of the most popular dividend stocks on the TSX, Enbridge (TSX:ENB), currently offers shareholders a juicy dividend yield of 6.9%. These payouts have risen at an annual rate of 11.3% in the last 20 years.
Enbridge has a vast base of cash-generating assets allowing it to earn stable earnings across market cycles. Its earnings are backed by long-term contracts, which are also indexed to inflation. The company continues to invest capital in new cash-generating assets allowing it to increase dividends in the future as well.
Brookfield Renewable Partners
Among the largest clean energy companies globally, Brookfield Renewable (TSX:BEP.UN) has already returned 325% to shareholders in dividend-adjusted gains since February 2013. Despite these outsized gains, it offers you a dividend yield of 4.9%.
The worldwide shift towards clean energy solutions should allow Brookfield Renewable to increase its cash flows at an accelerated pace in the upcoming decade, making it a top TSX stock to own in 2023.
Fiera Capital
A company operating in the alternative asset management space, Fiera Capital (TSX:FSZ) offers you a forward yield of 9.4%. Fiera Capital generates revenue primarily via management and performance fees, which in turn depend on the broader market environment.
In the case the conditions of the global markets improve in the next year, Fiera Capital should see an uptick in assets under management, which will also drive profits higher.
Bank of Nova Scotia
A banking giant, the Bank of Nova Scotia (TSX:BNS) offers investors a dividend yield of 5.8%. BNS and its Canadian peers are quite conservative compared to their counterparts south of the border. This approach allowed BNS to maintain dividends even during the financial crash of 2009.
Bank of Nova Scotia is well-capitalized and trading at less than 12 times forward earnings, making it a top TSX stock to own in 2023.
Brookfield Infrastructure Partners
The final stock on my list is Brookfield Infrastructure Partners (TSX:BIP.UN), which currently yields 4.5%. A company that is fairly recession-resistant, Brookfield Infrastructure has managed to increase the bottom line at an enviable rate in 2022, despite an inflationary environment.
It operates in several verticals that include transportation, midstream, data centers, and more, providing it with the capacity to generate robust cash flows across economic cycles.
The Foolish takeaway
Investing $35,200 equally in each of these five stocks will help you generate $11,000 in annual dividend income. In the case these payouts increase by 7% annually, your annual dividends will double to $22,000 in the next 10 years.
