Canadian retirees need to consider supplementing their CPP (Canada Pension Plan) payout with multiple income streams. The average CPP payment for a 65-year-old starting pension is less than $10,000 per year, which is not sustainable to lead a comfortable life.
One way to create a passive-income stream is to buy and hold blue-chip dividend stocks in a TFSA (Tax-Free Savings Account). Introduced in 2009, the TFSA is a popular registered account in Canada, as any returns in the form of dividends and capital gains are exempt from taxes.
The TFSA contribution in 2023 has increased to $6,500, taking the cumulative contribution room to $88,000. Here are three TSX dividend stocks you can hold in a TFSA to help you boost your CPP payouts in 2023.
Brookfield Infrastructure stock
Shares of Brookfield Infrastructure (TSX:BIP.UN) have surged 1,350% after accounting for dividends since its initial public offering in 2009. Despite delivering outsized gains, BIP stock currently offers a dividend yield of 4.5% to shareholders today.
The company is well positioned to benefit from multiple secular tailwinds, such as data usage and artificial intelligence (AI). For example, the introduction of AI-powered services will increase demand for data storage at an exponential rate in the upcoming decade.
The global economy is forecast to allocate US$1 trillion in the next five years to upgrade data storage infrastructure which provides a massive opportunity for BIP. Recently, Brookfield Infrastructure Partners disclosed plans to acquire Compass Datacenters in partnership with other institutional partners.
Brookfield Infrastructure owns and operates several such cash-generating assets across verticals, including utilities, transports, cell towers, and midstream, making it a top stock for long-term investors.
goeasy stock
Another TSX stock that has returned over 1,000% in the last decade, goeasy (TSX:GSY) offers shareholders a yield of 3.5%. Between 2012 and 2022, goeasy has grown sales at an annual rate of 17.7%. In this period, its net income has expanded by 28.9% each year, allowing the company to increase payouts by more than 12% annually.
Priced at eight times forward earnings, you can buy a quality high growth at a discount of 50% compared to consensus price target estimates.
goeasy is the non-prime financial lending space and might seem a risky buy, especially if default rates surge higher in an economic downturn. But it is armed with robust risk-management techniques and has disbursed over $10 billion in loans to date.
Fortis stock
A Canada-based utility giant, Fortis (TSX:FTS) has over $65 billion in total assets. It offers you a yield of more than 4%, and the company has increased dividends for 49 consecutive years, the second-largest streak for a Canadian company.
Fortis owns and operates 10 affiliated electric and gas operations and serves over three million customers in North America. Its asset base is regulated and diversified, allowing Fortis to earn cash flows across business cycles.
Due to rising interest rates and narrower profit margins, Fortis ended 2022 with a payout ratio of 78% compared to 66% in 2017. But the utility heavyweight aims to increase dividends between 4% and 6% through 2027.
Priced at less than 20 times forward earnings, Fortis stock trades at a discount of 8% to price target estimates.
