3 Must-Own Canadian Dividend Stocks for Your TFSA Portfolio

Three gotta-have Canadian dividend stocks for TFSA investors who want to maximize gains in a powerful tax-sheltered investment account.

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Canadian dividend stocks are today’s most suitable holdings in a Tax-Free Savings Account (TFSA) portfolio. Apart from the tax advantages (money growth and withdrawals), maximum capital gains are within reach with these three must-own dividend-payers. More importantly, these companies will provide rock-steady passive income streams notwithstanding the elevated market volatility.

Semi-annual dividend hikes

TFSA investors should find the current dividend program of TELUS Corporation (TSX:T) very enticing. In May 2022, management disclosed its intentions to target semi-annual dividend increases, along with an annual percentage increase from 7% to 10%, from 2023 through year-end 2025.

The 5G stock trades at $28.21 per share (+9.37% year to date) and pays a lucrative 5% dividend. Assuming you max out your $6,500 TFSA limit for 2023, your money will generate $325 in passive income in one year. Assume further that you reinvest the dividend and the yield increases by at least 7%. Your total dividend for the following year would be $365.14 from capital of $6,825.

The $40.3 billion telecommunications and information technology company proactively adjusts to new norms and tweaks the business model to align with changing consumer behaviour. TELUS continues to invest in its leading-edge broadband technology, which is the primary reason for the success of its products and services.

As of December 31, 2022, approximately 83% of Canada’s population (30.8 million) can connect or access the TELUS 5G network. Besides its core business (telecoms), other major brands include TELUS International, TELUS Health, and TELUS Agriculture. In 2022, net income rose 1.1% year over year to $1.7 billion. In Q4 2022, free cash flow climbed 651.2% to $323 million versus Q4 2021.

Dividend grower

It would be nice to fill your TFSA portfolio with dividend aristocrats, and your balance will snowball with a dividend grower like TC Energy (TSX:TRP). Besides its juicy 6.77% dividend yield, the $56.8 billion pipeline operator has raised the payout yearly since 2000. The current share price is $55.56 (+4.7% year to date).

Despite a $1.4 billion net loss in Q4 2022, the Board of Directors approved a 3.3% increase in the quarterly common share dividend. Management attributes the loss to the rising costs for its 84%-complete Coastal GasLink project. The 670-kilometre natural gas pipeline should be operational by the end of the year.

Monthly dividends

Nexus Industrial (TSX:NXR.UN) is a cheaper but profitable option for TFSA investors. The $837.3 million growth-oriented real estate investment trust (REIT) boasts a high-quality industrial-focused portfolio. In Q4 2022, around 88% of net operating income (NOI) comes from these high-demand properties with a 99% occupancy rate.

At only $9.54 per share (+0.51% year to date), you can partake in the 6.79% dividend (monthly payout frequency). Management is inviting investors to participate in the growth stages of this industrial vehicle with quality assets. For 2023, Nexus will add 925,000 square feet in gross leasable area and pursue multiple expansion opportunities. The weighted average lease term is 6.6 years.

Successful strategy

TFSA investors need to be cautious in 2023 and avoid higher-risk investments. The successful strategy in today’s investment landscape is to mitigate or lessen the risk of loss by investing in companies that can overcome the downturn and sustain dividend payments.

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.

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends TELUS and Telus International. The Motley Fool has a disclosure policy.

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