TFSA Passive Income: 2 High-Yield Canadian Stocks to Own for Decades

These top TSX dividend-growth stocks now offer 6% yields.

| More on:
Increasing yield

Image source: Getty Images

Retirees seeking passive income and younger investors focused more on total returns can take advantage of the market correction to buy top TSX dividend stocks at discounted prices for their self-directed Tax Free Savings Account (TFSA) portfolios.


BCE (TSX:BCE) is Canada’s largest communications company with a current market capitalization near $59 billion. The stock trades for close to $64 per share at the time of writing compared to a 2022 high of $74.

BCE stock is above the 12-month low, but investors can still secure a solid 6% dividend yield and wait for distribution increases to boost the return on the initial investment. BCE increased the dividend by at least 5% in each of the past 15 years.

The company’s core revenue stream comes from essential mobile and internet service subscriptions. This means the stock should be good to own during an economic downturn. People and businesses need to communicate and stay connected to the world regardless of the situation in the economy. BCE’s media group, however, is more susceptible to revenue fluctuations. Advertisers tend to reduce their marketing budgets when times get tough. Hardware purchases can also decline during a recession if consumers decide to keep older phones for longer.

BCE reported solid first-quarter (Q1) 2023 results, despite the current economic headwinds. Consolidated revenue increased 3.5% compared to Q1 2022. Wireless service revenue rose 5.4% and consumer internet revenue jumped 10%. This helped offset a 5.5% decrease in operating revenue in the media business due to lower advertising revenue and a drop in subscriber revenues.

The sharp rise in interest rates over the past year is driving up borrowing costs. This is expected to lead to a 3-7% decline in adjusted earnings per share in 2023. However, BCE predicts it will see overall revenue grow in 2023 and free cash flow guidance is for an increase of 2-10%.

As such, investors should see another decent dividend materialize in 2024.

TC Energy

TC Energy (TSX:TRP) is a major player in the North American energy infrastructure industry with 93,000 km of natural gas pipelines and 650 billion cubic feet of natural gas storage capacity in Canada, the United States, and the Caribbean. The company also has oil pipelines and power-generation facilities.

TRP stock trades near $56 per share. That’s up from the 12-month low around $51 but still down considerably from the $74 it hit last year.

Weakness has largely occurred due to problems on a major project. TC Energy’s Coastal GasLink pipeline will eventually transport natural gas from producers in northeastern British Columbia to a liquified natural gas (LNG) facility on the B.C. coast. Unfortunately, costs have soared on the project due to pandemic delays, rising material prices, issues with contractors, and challenging weather conditions.

In the most recent update, TC Energy said the total cost is expected to be at least $14.5 billion. That’s more than double the original estimate. The final tally could be more if construction drags into 2024. TC Energy recently paused work on the pipeline due to erosion issues caused by the spring melt in British Columbia.

On the positive side, the project is 87% complete, so there is light at the end of the tunnel. TC Energy reported strong Q1 2023 results and reaffirmed its full-year 2023 guidance of 5-7% growth in comparable earnings before interest, taxes, depreciation, and amortization.

Management plans to increase the dividend by at least 3% per year over the medium term. The board has raised the payout annually for more than two decades. Investors who buy the stock at the current level can get a 6.6% dividend yield.

The bottom line on top stocks to buy for passive income

BCE and TC Energy pay attractive dividends that should continue to grow. If you have some cash to put to work in a TFSA focused on dividends, these stocks deserve to be on your radar while they remain out of favour.

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 has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker owns shares of BCE.

More on Dividend Stocks

potted green plant grows up in arrow shape
Dividend Stocks

Best of Both Worlds: 3 Growth Stocks That Also Pay Dividends

Dividend stocks are great until a downturn ends. But luckily, these three dividend stocks also offer a massive amount of…

Read more »

Payday ringed on a calendar
Dividend Stocks

Monthly Passive Income: 2 Top TSX Dividend Stocks to Buy in June 2023

Here are two of the best TSX monthly dividend stocks you can buy in June 2023.

Read more »

Female hand holding piggy bank. Save money and financial investment
Dividend Stocks

RRSP Wealth: 2 Great Canadian Dividend Stocks to Buy in June 2023

Top TSX dividend stocks are now on sale.

Read more »

Retirees sip their morning coffee outside.
Dividend Stocks

Retirees: 2 TSX Dividend Stocks That Reliably Pay You Cash

With strong underlying businesses, high-yielding dividends, and stable cash flows, these two TSX stocks can be excellent investments to consider.

Read more »

sad concerned deep in thought
Dividend Stocks

Better Buy for TFSA Passive Income: Telus Stock or TD Bank? 

Your passive income depends on the dividend yield you lock in. Telus and TD Bank are good investments, but which…

Read more »

Dividend Stocks

Turn a $10,000 Investment Into $844 in Cash Every Year

The power of compound interest from regular investments in quality dividend stocks can deliver solid long-term returns and make you…

Read more »

Dividend Stocks

Grab This 10.8% Dividend Yield Before It’s Gone!

This dividend stock is down 43% in the last year, and it's about to turn around in the near future.…

Read more »

grow dividends
Dividend Stocks

2 TSX Dividend Stocks With Seriously Huge Payouts 

If you are looking for dividend payouts of up to 7-11% of the stock price, now is the time, as…

Read more »