The Tax-Free Savings Account (TFSA) is one of the best places for investors to park their cash. If you’re able to hit the contribution limit each year, there really is not end to how much passive income you can create through dividends and returns.
Yet today, I’m going to focus on just a little bit of those fund. The current contribution limit is at $88,000. So, let’s say we took $15,000 of that and put it towards three income stocks. If so, these are the three I would choose.
First $5,000
The first $5,000 I would put towards a Big Six bank. Canadian banks climb higher and higher, only dropping during economic downturns such as this one. This is exactly why I would choose to purchase shares in these stocks right now.
After all, Canadian banks have been around for decades, if not hundreds of years, in some cases! Yet in more recent decades, these banks have returned to pre-drop prices within a year of hitting 52-week lows from recessions. Among them all, however, if you’re seeing income, I would go with Canadian Imperial Bank of Commerce (TSX:CM).
CIBC stock is a solid choice as a dividend producer with a yield currently at 6.04%, with shares down 12% in the last year. As the market recovers, specifically in housing, CIBC stock should do quite well in the future. Shares are still up 49% in the last decade, even after the recent drop. Here is how much $5,000 would get you right now before a recovery in your TFSA.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND (ANNUAL) | TOTAL PAYOUT (ANNUAL) | FREQUENCY |
| CM | $57.92 | 86 | $3.48 | $299.28 | Quarterly |
Second $5,000
The next $5,000 I would put towards a monthly producing real estate investment trust (REIT). There are many to consider, but I would choose one with stable payouts and plenty of cash on hand. And honestly, a strong option to consider these days are those fixated on essentials.
Even here there are a number to consider, but I would look at Slate Grocery REIT (TSX:SGR.UN) these days. There is far more competition in the United States where Slate stock focuses its attention. However, that provides the company with many brand partnerships across the country, with lease agreements often in the double digits.
Yet Slate stock is also down this year, with shares down 10.25% in the last year alone. Even so, this means you can bring in a dividend yield currently at 8.98% as of writing. If you were looking for more income from this monthly dividend stock, here’s how much $5,000 would bring into your TFSA.
| COMPANY | RECENT PRICE | NUMBER OF SHARES (ANNUAL) | DIVIDEND (ANNUAL) | TOTAL PAYOUT | FREQUENCY |
| SGR.UN | $13.10 | 382 | $1.17 | $446.94 | Monthly |
Last $5,000
I’d start looking at what’s going to do well in the more near term when it comes to the last $5,000. Here I would consider investing in renewable energy, as this could be one of the biggest opportunities on the TSX today.
Renewable energy is no longer the future, it’s here. Governments and private institutions continue to invest in the sector, as countries around the globe look to produce their own energy. Yet one of the world’s largest renewable energy producers remains Brookfield Renewable Partners (TSX:BEP.UN).
It’s actually a great time to buy after the company’s shares dropped 7% from announcing a new acquisition. You can get a further discount, with shares down 11% in the last year, though still up 12% year to date. There’s also a dividend yield of 4.61% to consider as well. Here’s what that final $5,000 could get you in your TFSA.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND (ANNUAL) | TOTAL PAYOUT (ANNUAL) | FREQUENCY |
| BEP.UN | $39.28 | 127 | $1.83 | $232.41 | Quarterly |
