TFSA Investors: The 3 Stocks I’d Buy Right Now for Tax-Free Income

The TFSA is the perfect buy it and park it place, but what do you buy? These three stocks are great starts.

| More on:
TFSA and coins

Image source: Getty Images

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.


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.


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.


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.

Fool contributor Amy Legate-Wolfe has positions in Brookfield Renewable Partners and Canadian Imperial Bank Of Commerce. The Motley Fool recommends Brookfield Renewable Partners. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Family relationship with bond and care
Dividend Stocks

TFSA Investors: 3 Cheap Canadian Stocks for Retirees

These three Canadian stocks are super cheap for retirees looking for a great buy that will last the test of…

Read more »

calculate and analyze stock
Dividend Stocks

CPP Disability Benefits: Here’s How Much You Could Get

Not everybody can get CPP disability benefits. If you want some passive income, consider investing in Royal Bank of Canada…

Read more »

growing plant shoots on stacked coins
Dividend Stocks

Boosting Your Monthly Income: TSX Stocks That Deliver

Dividend investing can boost regular or active incomes, especially select TSX stocks that pay monthly dividends.

Read more »

Canadian Dollars
Dividend Stocks

How to Earn $2,005 in Passive Income With No Start-Up Costs

Passive income doesn't need to be difficult work. In fact, by definition, it shouldn't be! Here's an easy way to…

Read more »

Dividend Stocks

TFSA Passive Income: How to Earn $4,800 Per Year Without the CRA Taking a Cut

A good strategy to generate tax-free income while reducing portfolio risk.

Read more »

edit Businessman using calculator next to laptop
Dividend Stocks

Ready to Invest With $5,000? 3 Stocks for December 2023

These top stocks are some of the most obvious choices out there for a reason. Pick them up if you're…

Read more »

Dividend Stocks

Should You Buy TC Energy for Passive Income?

TC Energy offers an attractive yield and a growing dividend. Is TRP stock now oversold?

Read more »

A plant grows from coins.
Dividend Stocks

2 TSX Dividend Stocks With Lucrative Yields in December 2023

BCE is one of the lucrative TSX dividend stocks generating strong cash flows, thus resulting in a steadily rising dividend.

Read more »