Retirement planning doesn’t need to be a complicated task, especially when you consider dividend investing as part of your strategy. Dividend investing can be a straightforward and effective way to build wealth and generate passive income during your retirement years. In addition, if you start adding some fundamentally strong dividend stocks to your TFSA (Tax-Free Savings Account) at an early age, you can expect to build your retirement fortune much sooner than you think.
In this article, I’ll talk about two top TFSA dividend stocks you can buy now to see your savings multiply over the long term to help you retire with financial freedom.
Canadian Imperial Bank stock
When you’re investing in stocks to grow your wealth for retirement, you should ideally avoid the unnecessary risks of investing a major portion of your TFSA portfolio in high-growth stocks. While, in some cases, high-growth stocks can yield some eye-popping returns in a short period of time, they tend to be significantly more volatile than consistent dividend-paying stocks with a strong financial base.
With that in mind, Canadian Imperial Bank of Commerce (TSX:CM) could be a trustworthy stock to invest in for the long term, especially if you want to steadily grow wealth for your retirement. After witnessing nearly 26% downside correction in 2022, the stock of this Toronto-headquartered lender currently trades at $56.39 per share with about 4% year-to-date gains and $51.2 billion in market cap. At this market price, CM stock offers an attractive 6.2% annual dividend yield.
While market uncertainties and rising provision for credit losses have affected the banking sector in recent quarters, Canadian Imperial Bank’s core banking operations largely continue to perform well.
In the five years between its fiscal 2017 and 2022 (ended in October), the bank’s adjusted yearly earnings increased by 27%, with a 34% jump in revenue. During the same timeframe, Canadian Imperial Bank’s dividend per share saw a solid 29% increase, reflecting its management’s consistent focus on rewarding loyal investors.
If you want to keep your stock investing journey for retirement planning simple, BCE (TSX:BCE) could be another reliable dividend stock to add to your TFSA for the long term. The Canadian communications giant has a market cap of $56 billion as its stock trades at $61.30 per share with a minor 2.6% year-to-date gain. At this market price, it has a 6.3% annualized dividend yield that can help you create a stable source of passive income.
In 2022, BCE registered a 3% year-over-year increase in its total revenue to $24.2 billion. Despite higher expenses, due mainly to inflationary pressures, more promotional offers, and increased media programming costs, the Canadian telecom company’s adjusted yearly earnings rose 5% to $3.35 per share as the strength in its wireless, fibre, and Bell Media segments remained intact.
In spite of short-term macroeconomic challenges, you can expect BCE’s financial growth trends to improve further in the coming years, as it continues to expand its reliable 5G network in its home market. Given that, its stock could continue soaring in the long run and help you build wealth for retirement.