The golden rule for retirement savings has shifted over the years, as the inflation rate has continued to pressure those with their eyes on a post-work life. Financial advisors and/or planners will typically advise Canadians to aim to generate 70-80% of their pre-retirement salary when they enter retirement. However, a good rule of thumb for the average Canadian is to aim for at least $1 million in total across your registered and unregistered accounts.
Today, I want to look at the best stocks to stash in our Tax-Free Savings Account (TFSA) as we look ahead to retirement. For our hypothetical, we will assume that we have maxed out our pre-retirement TFSA at $88,000 in 2023. Let’s jump in.
Here’s a green energy stock that will pay you monthly in your TFSA
TransAlta Renewables (TSX: RNW) is the first stock I’d seek to stash in our TFSA. This Calgary-based company owns, develops, and operates renewable and natural gas power-generation facilities and other infrastructure assets in Canada, the United States, and Australia. Shares of this TSX stock have jumped 13% month over month as of close on Wednesday, July 19. The stock is up 16% so far in 2023.
This company released its first-quarter (Q1) fiscal 2023 earnings on May 5. Revenues dropped to $119 million compared to $143 million in the previous year. EBITDA stands for earnings before interest, taxes, depreciation, and amortization, and aims to give a clearer picture of a company’s profitability. TransAlta posted adjusted EBITDA of $128 million — down marginally from $139 million in the prior year.
Earlier in July, TransAlta signed a deal to acquire TransAlta Renewables for $1.3 billion. In the meantime, TFSA investors can take advantage of its monthly dividend of $0.078 per share. That represents a superb 7% yield.
This top Canadian bank can help you retire rich
TD Bank (TSX: TD) is the second largest of the Big Six Canadian banks by market capitalization, just behind Royal Bank of Canada. Shares of this top bank stock have increased 7.3% month over month as of close on July 19. However, the stock is still down 1.8% in the year-to-date period. Investors can see more of its recent performance with the interactive price chart below.
Investors got to see TD Bank’s Q2 earnings in late May. The bank reported adjusted net income of $3.75 billion, or $1.94 per diluted share, in Q2 2023 compared to $3.71 billion, or $2.02 per diluted share, in the previous year. TD Bank benefited from net income growth in its Canadian and United States Personal and Commercial Banking divisions. Higher interest rates in both countries have bolstered its profit margins.
TD Bank stock currently possesses a favourable price-to-earnings ratio of 10. TFSA investors can also rely on its quarterly distribution of $0.96 per share, which represents a solid 4.4% yield.
One more monthly income beast I’d stash in our TFSA today
Northwest Healthcare REIT (TSX:NWH.UN) is the third and final stock I’d suggest for Canadians who are gunning for retirement in their golden years. This real estate investment trust (REIT) owns and operates a global portfolio of high-quality healthcare real estate. I’m still excited about snatching up this undervalued REIT in a TFSA right now.
The REIT released its Q1 2023 earnings on May 12. Northwest reported revenue growth of 29% to $135 million with a strong portfolio occupancy of 97%. Meanwhile, total assets under management increased 13% to $10.8 billion. Shares of this REIT are trading in attractive value territory compared to its competitors. The REIT last paid out a monthly distribution of $0.067 per share, representing a monster 11% yield.
