TFSA Investors: How to Earn $100 Each Month for Retirement

Tax-free dividends supplement your income post-retirement. Thus, the shares of fundamentally strong Canadian corporations offering reliable dividend payments appear as attractive investments for TFSA (Tax-Free Savings Account) investors to earn regular monthly cash. 

Thankfully, the TSX has several Canadian stocks consistently enhancing their shareholders’ returns through uninterruptedly paying and growing their dividends. This means that TFSA investors could consider investing in these stocks to generate a regular inflow of cash post-retirement. 

However, retirees should note that dividend payments are not guaranteed. Further, the volatility associated with stocks could erode your capital. 

With this backdrop, I’ll discuss two Canadian dividend stocks that have increased their dividends for several years. Moreover, I’ll focus on large-cap companies with a growing earnings base and well-covered payouts. Let’s dig deeper. 

Enbridge 

Enbridge (TSX:ENB) is a must-have stock for TFSA investors seeking worry-free income post-retirement. The company provides the infrastructure required to transport oil and gas. Moreover, it has ownership interests in renewable energy facilities. Enbridge is an integral part of the energy value chain, and its assets witness a high utilization rate, driving the company’s earnings and cash flows. 

Furthermore, its resilient business model and contractual arrangements have led Enbridge to enhance its shareholders’ returns by consistently increasing its annual dividend payments. 

This energy company has been paying dividend for over 68 years. Impressively, it has raised its dividend for 28 years. 

Looking ahead, its over 40 diverse income streams, long-term contracts with provisions to minimize price and volume risks, and two-pronged growth strategy (investments in conventional and renewable energy) position it well to deliver strong distributable cash flows and will drive its dividend payments. Furthermore, its multi-billion-dollar secured capital program and revenue escalators are expected to support its growth. 

It pays a quarterly dividend of $0.887 a share, translating into a lucrative dividend yield of 6.62%. 

Scotiabank 

Let’s turn towards Canadian banks from energy for a worry-free income. It’s worth highlighting that top Canadian banks have a solid history of dividend payments. For instance, a few Canadian banks have been paying dividends for over 100 years. Among the leading banks, investors could consider investing in the shares of Scotiabank (TSX:BNS). 

This financial services giant has paid regular dividend since 1833. Furthermore, its dividend has had a compound annual growth rate of 6% since 2011. Scotiabank’s growing earnings base supports its dividend payouts. Notably, its earnings grew at an average annualized growth rate of 5% in the past decade. 

Overall, its diversified revenue base, exposure to high-quality banking markets, solid credit performance, robust balance sheet, and operating efficiency will likely drive its earnings and dividend payments. 

Scotiabank pays a quarterly dividend of $1.03 a share, reflecting a dividend yield of 6.10%. 

Bottom line 

These companies’ solid dividend payout history, resilient business model, diversified revenue streams, and ability to grow earnings in all market conditions position them well to enhance shareholders’ returns through higher payouts. 

Also, their well-protected and high dividend yields make them attractive stocks to earn a reliable income. 

The table shows that if you invest about $10K each in shares of Enbridge and Scotiabank, you can earn $318 in tax-free dividend income every quarter, or over $100 per month.