There’s never a bad time to think about building an additional stream of income — especially with all of the volatility we’ve experienced over the past year, which I’d argue won’t be slowing down just yet. Having a little extra cash on the side could go a long way.
Fortunately, for Canadian investors, the TSX has no shortage of top dividend stocks to choose from. Whether you’re looking for a top yield or a century-long payout streak, or both, there’s a Canadian dividend stock for you.
Using a TFSA for dividend investing
Once you’ve made the decision to invest in a dividend stock, you’ll need to decide on the type of savings account to hold that investment in.
The Tax-Free Savings Account (TFSA) is often thought of as a short-term savings vehicle, but there’s no reason why it can’t be used for long-term goals, too.
The beauty of the TFSA is that your dividend stocks owned within the account can generate passive income completely tax free. In addition, once you’re ready to withdraw those earnings, there’s once again no need to pay any tax.
And simultaneously while your dividend stocks are earning passive income, there’s also the possibility that the stocks are also appreciating in value. That’s one of the reasons why the TFSA can be an excellent choice for long-term savings goals, too.
With that in mind, here are two top dividend stocks that passive-income investors should have on their watch lists.
Dividend stock #1: Brookfield Infrastructure Partners
There’s not a whole lot to get excited about with this slow-growing utility stock. That is, unless you’re looking for a company that can provide an investment portfolio with both dependability and passive income.
At today’s stock price, Brookfield Infrastructure Partners’s (TSX:BIP.UN) dividend is yielding close to 5%.
It’s not only a nearly 5% yield that makes this dividend stock a top buy, though. It’s the defensiveness that the stock can provide its shareholders.
Regardless of the condition of the economy, demand levels for utilities tend to remain fairly stable, making Brookfield Infrastructure Partners an excellent company to hold during uncertain market conditions.
If you’re predicting that these levels of volatility will continue throughout 2023, Brookfield Infrastructure Partners would be a wise addition today.
Dividend stock #2: Sun Life
Speaking of slow-growing dependable companies, Sun Life (TSX:SLF) is another prime example of a stock that you can feel good about owning during uncertain economic periods.
Similar to the utility industry, insurance stocks are far from the most exciting companies on the TSX to own.
The reason why I have Sun Life on my own watch list right now is because of the long-term stability of the insurance industry. I don’t expect to see a decline in demand for insurance anytime soon, making a global leader like Sun Life a fantastic long-term hold.
Sun Life’s dividend yield of 4.7% today is just about the same as Brookfield Infrastructure Partners.
It’s not the highest yield you can find on the TSX today, but with the added defensiveness the two stocks can provide, both companies are top picks for passive-income investors.