Some investors say you’ve got to take higher risk in the Tax-Free Savings Account (TFSA) to make more money. The tricky part is everyone’s risk tolerance is different. And, of course, they have unique financial goals and investment horizons as well. For example, some folks might like to invest in high-growth stocks in their TFSAs, but they would need to watch their portfolios more closely.
If you want to retire with confidence, take less risk, and take less time to manage your TFSA, you can consider top dividend stocks that could deliver solid long-term returns.
Brookfield Asset Management
Brookfield Asset Management (TSX:BAM) stock provides a good balance of income and growth. It just reported strong results for its second quarter yesterday. BAM president, Connor Teskey, highlighted that the results showcase the resilience of its business and stability of its fee streams that are driven by nearly 85% of fee-bearing capital in long-term, perpetual funding.
Year to date, it has raised US$37 billion of capital, which it expects to accelerate in the second half of the year. Combined with about US$50 billion of additional insurance inflows, it expects to raise close to US$150 billion of capital this year, which should drive meaningful earnings growth in 2024 and beyond.
The trailing 12-month results show a bigger picture. The key results are as follows. Fee-related earnings grew 11% to US$2,194 million, leading to distributable earnings growth of 9% to US$2,183 million. The fee-related earnings per share (EPS) growth was almost 11% at US$1.34, while the distributable EPS growth was 9% at US$1.33.
BAM stock popped 4% in light of the news. At $46.95 per share, the dividend stock appears to be fairly valued and offers a dividend yield of about 3.6%. The company has demonstrated a track record of growth, which should reward long-term shareholders. It is a wonderful business at a fair price.
TD Bank stock
Perhaps investors can find better value in Toronto-Dominion Bank (TSX:TD) stock, which is out of favour. The big Canadian bank stock is an excellent choice for investors looking for a quality core holding that pays out decent dividend income and offer stable long-term growth.
TD stock has corrected about 16% from its peak in early 2022. Despite this stumble, the bank stock has delivered a 10-year return of about 11.3% per year, which is not bad for a blue-chip stock.
It has been in consolidation mode since roughly mid-2022. The stock is likely still weak because the market is worried about an upcoming recession by 2024 in Canada and the United States, which are TD’s core markets of operation.
In the fiscal year to date, TD generated adjusted revenue growth of 15% to $25.6 billion. However, there was a jump in loan loss provision to $1,289 million (versus $99 million in the prior-year period). Additionally, non-interest expenses also climbed 11%. These items weighed on earnings. Ultimately, adjusted net income only rose 4.8% to $7,907 million. And adjusted EPS rose 2% to $4.17.
The increased economic uncertainty provides investors an opportunity to pick up shares for an initial dividend yield of approximately 4.5%. At $85.85 per share, the stock trades at a discount of about 16% from its long-term normal valuation.
