TFSA Investors: 2 High-Yield Canadian Dividend Stocks to Buy Now for Passive Income

These TSX stocks raised their dividends this year and now offer high yields.

| More on:
A plant grows from coins.

Source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Retirees and other investors searching for passive income can now buy great TSX stocks at discounted prices for a self-directed Tax-Free Savings Account (TFSA).

Pembina Pipeline

Pembina Pipeline (TSX:PPL) trades near $40 at the time of writing compared to $52 in early June last year. The pullback is part of the broader decline in energy infrastructure stocks and is starting to look overdone.

Created with Highcharts 11.4.3Pembina Pipeline PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

Pembina Pipeline generated solid results for the first quarter (Q1) of 2023 with adjusted earnings before interest taxes depreciation and amortization (EBITDA) of $947 million compared to $1.01 billion in the same period last year. The drop was largely due to an outage on the Northern Pipeline system.

Pembina Pipeline provides midstream services to oil and natural gas producers primarily located in western Canada. The company has liquids and natural gas pipelines, gas gathering and processing facilities, logistics operations, and propane export terminals.

For 65 years the business has grown through a combination of internal projects and strategic acquisitions. Pembina pipeline currently has a market capitalization around $22 billion. This gives it the firepower to do deals, but the company is also at a size that would potentially make it a takeover target for a larger energy infrastructure player or even an alternative asset manager looking for a business with strong cash flow.

Management confirmed full-year guidance and the board just increased the dividend by 2.3%. Investors who buy the stock at the current level can get a 6.6% yield.

Bank of Nova Scotia

Bank of Nova Scotia (TSX:BNS) hired a new chief executive officer this year. The bank is undertaking a strategic review of the Canadian and international operations and could announce some big changes later this year or in early 2024.

Pundits are curious to see if all the Latin American businesses will remain core to the growth strategy. Bank of Nova Scotia’s foreign operations are primarily in Mexico, Peru, Chile, and Colombia. The four countries are members of the Pacific Alliance trade bloc that is home to a combined population of more than 230 million. Bank penetration is relatively low in these markets, so there is an opportunity for good growth as the middle class expands.

That being said, political and economic uncertainty is always a concern and BNS stock has unperformed its peers in recent years. Mexico will likely remain part of the mix, but the operations in the other three markets could potentially get sold off and the funds used to target new opportunities.

Until the bank lays out its plans, investors can take advantage of the weakness in the share price to pick up a 6.6% yield. The stock trades near $64 per share compared to above $81 in August last year. Bank of Nova Scotia just raised the quarterly dividend to $1.06 from $1.03. This suggests the board isn’t too worried about the revenue and earnings outlook, even with the anticipated economic headwinds.

The bottom line on top stocks to buy for passive income

Pembina Pipeline and Bank of Nova Scotia pay attractive dividends that should continue to grow. If you have some cash to put to work in a portfolio targeting passive income, these stocks deserve to be on your radar.

Should you invest $1,000 in Bank of Nova Scotia right now?

Before you buy stock in Bank of Nova Scotia, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Bank of Nova Scotia wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

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 recommends Bank Of Nova Scotia and Pembina Pipeline. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker has no position in any stock mentioned.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

A worker gives a business presentation.
Dividend Stocks

Market Dip: Opportunity or Risk This April?

This market dip might have investors worried, but should they be excited instead?

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

Why I’d Add This Top TSX Dividend Stock to My TFSA During the Current Dip

The market is full of volatility right now. Fortunately, this top TSX dividend trades at a discount and pays a…

Read more »

Pile of Canadian dollar bills in various denominations
Dividend Stocks

Invest $20,000 in 2 TSX Stocks for $1,421.09 in Passive Income

Are you looking to bump up your passive income? Then consider these two TSX stocks.

Read more »

A plant grows from coins.
Dividend Stocks

Where I’d Invest in Canadian Value Stocks for Long-Term Compounding

When markets plunge, Warren Buffett's wisdom shines: Get greedy when others are fearful. Canadian value stocks like Scotiabank await patient…

Read more »

analyze data
Dividend Stocks

How I’d Invest $28,000 in Canadian Natural Resource Stock to Amass Personal Wealth

Investing in TSX dividend stocks such as Enbridge can help you earn a passive-income stream in 2025.

Read more »

hand stacks coins
Dividend Stocks

Got $400? How I’d Start Building Income With 3 High-Yield Stocks for the Long Term

These high-yield dividend stocks have a solid payout history, making them compelling investments to generate passive income.

Read more »

A close up color image of a small green plant sprouting out of a pile of Canadian dollar coins "loonies."
Dividend Stocks

I’d Put $15,000 in These 3 Dividend-Growth Champions for Increasing Income Potential

Want to offset some volatility? Here are three defensive dividend-growth champions that can generate a juicy yield right now.

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

Transform Your TFSA Into a Cash-Creating Machine With $7,000

Discover how the Tax-Free Savings Account can be your golden goose for generating cash without losing your investment.

Read more »