TFSA Passive Income: 2 Top TSX Dividend Stocks to Own for 20 Years

These top TSX dividend stocks deserve to be on your radar for reliable passive income.

| More on:
stock research, analyze data

Image source: Getty Images

The market correction is is giving pensioners and other Tax-Free Savings Account (TFSA) investors a chance to buy good TSX dividend stocks at discounted prices to hold in portfolios targeting reliable and growing passive income.

Fortis

Fortis (TSX:FTS) is a Canadian utility company with $64 billion in assets located across Canada, the United States, and the Caribbean. The businesses include power-generation facilities, natural gas distribution utilities, and electric transmission networks.

Fortis stock has been on an upward trend for the past six months, but the share price still hasn’t regained all the losses it incurred from late May to mid-October last year. At the time of writing, Fortis trades near $59.50 per share compared to $65 last spring.

Income investors own Fortis for its steady dividend growth and the company’s clear guidance on planned dividend increases. Fortis raised the dividend in each of the past 49 years and intends to boost the payout by at least 4% per year through 2027.

This is a good example of a stock that is attractive for its dividend growth more than for its yield. At the time of writing, Fortis offers a dividend yield of 3.8%.

Fortis has a $22.3 billion capital program on the go to drive revenue and cash flow expansion. The company is also known for its successful track record of making strategic acquisitions to boost revenue growth.

Bank of Montreal

Bank of Montreal (TSX:BMO) is a contrarian pick today. The stock trades near $121 per share compared to the 12-month high around $148. Investors can take advantage of the dip to secure a 4.7% dividend yield and wait for future increases to increase the return.

Bank of Montreal recently closed its US$16.3 billion acquisition of Bank of the West, a U.S. regional bank with operations primarily located in California. The meltdown in U.S. bank stocks in March might be putting pressure on Bank of Montreal, as investors wonder if the company paid too much for Bank of the West.

The failure of another California-based bank this year triggered the rout in bank stocks and the market is still trying to figure out if more danger lurks in the banking sector. Ongoing volatility should be expected, but Bank of Montreal’s dividend should be safe, and the purchase of Bank of the West is expected to help drive revenue and profit growth in the coming years.

Despite the uncertainty in the banking sector and potential economic headwinds, the stock appears oversold.

The bottom line on top stocks to own for passive income

Fortis and Bank of Montreal are good examples of top TSX dividend stocks with distributions that should continue to grow. If you have some cash to put to work in a TFSA focused on passive income, these stocks 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 Dividend Stocks

dividends grow over time
Dividend Stocks

1 Magnificent Dividend Stock That’s Down 10% and Trading at a Once-in-a-Decade Valuation

This dividend stock may be down around 10%, but there is a huge future opportunity for those wanting growth as…

Read more »

Canada national flag waving in wind on clear day
Dividend Stocks

RRSP Must-Haves: 2 Canadian Stocks to Secure Your Future

The TSX’s dividend pioneer and first Dividend King are must-haves in an RRSP to ensure financial security in retirement.

Read more »

stock research, analyze data
Dividend Stocks

How Much to Invest to Get $500 in Dividends Every Month

TSX dividend stocks such as Enbridge, TD Bank, and Telus, can help you earn $500 in monthly dividend payments.

Read more »

Golden crown on a red velvet background
Dividend Stocks

Dividend Powerhouses: Canadian Stocks to Fuel Your Portfolio

These two top Canadian dividend aristocrats are some of the top stocks on the TSX to buy now and hold…

Read more »

Dial moving from 4G to 5G
Dividend Stocks

This Undervalued Dividend Stock is Worth Buying Right Now

Want an undervalued dividend stock with long-term potential and a juicy yield? Here's an option you may regret not buying…

Read more »

A worker gives a business presentation.
Dividend Stocks

1 Stock I’m Buying Hand Over Fist in July Despite the Market’s Pessimism

This top dividend stock is going through a rough patch, but don't let that count out all the growth we've…

Read more »

person on phone leaning against outside wall with scenic view at airbnb rental property
Dividend Stocks

2 TSX Stocks Poised to Have a Big Summer

Restaurant Brands International (TSX:QSR) stock and another darling that could be too cheap to ignore this summer.

Read more »

HIGH VOLTAGE ELECRICITY TOWERS
Dividend Stocks

Forget Fortis Stock: Buy This Magnificent Utilities Stock Instead

Looking for high dividends and returns? Then I'm sorry, but Fortis (TSX:FTS) stock probably isn't for you.

Read more »