Why This Dividend Stock Can Provide Your TFSA With Lifelong Income

This dividend stock is an ideal income creator for your TFSA for a lifetime, because it’s already done it before.

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When it comes to securing a steady stream of income for the long term, Canadians have a powerful tool at their disposal: the Tax-Free Savings Account (TFSA). This tax-advantaged account allows you to grow your investments without the burden of taxes on capital gains, dividends, or interest income. If you’re seeking a reliable source of lifelong income, the TFSA is a game changer.

In this article, we’ll explore why dividend stocks are an excellent choice for your TFSA. Furthermore, I’ll discuss why one dividend stock is an ideal candidate for building a robust, income-generating portfolio.

Consider utilities, a reliable income generator

Utility companies are renowned for their ability to provide stable and consistent income to investors. These companies are responsible for delivering essential services like electricity, gas, and water. Regardless of economic conditions, people need these services, making utility stocks a resilient choice.

Utility companies typically operate in regulated markets, which means they have a degree of pricing power and stability. Their revenue streams are reliable, and they often return a significant portion of their profits to shareholders — usually in the form of dividends.

Canadian Utilities: A time-tested choice

Canadian Utilities (TSX:CU) is a prime example of a dividend stock with a remarkable track record. Established in 1912, it has been a stalwart in the Canadian market for over a century. What’s more impressive is its commitment to paying and increasing dividends for over five decades.

This Dividend King’s history of dividend growth is a testament to its financial strength and stability. Investors in Canadian Utilities have enjoyed the benefits of consistent income and the potential for capital appreciation.

Earnings continue to fuel future growth

To understand why Canadian Utilities is a solid choice for your TFSA, let’s look at its recent earnings. In the second quarter of 2023, the company reported adjusted earnings of $100 million, equivalent to $0.37 per share. While this represents a decrease from the same period in 2022, it’s essential to note that the company’s long-term focus on dividend growth remains intact.

The utility giant’s commitment to renewable energy is another noteworthy development. Its investments in solar and wind projects, such as the Barlow and Deerfoot solar developments, indicate its dedication to sustainable and profitable ventures. The transition towards clean energy aligns with the global shift towards a more sustainable future, potentially opening up new revenue streams and opportunities for growth.

Its intentions to explore various financing alternatives, including the possibility of creating a separate entity for ATCO EnPower, demonstrate its commitment to maximizing growth potential. Additionally, Canadian Utilities’s recent declaration of a third-quarter dividend of 44.86 cents per share highlights its unwavering commitment to rewarding shareholders with a consistent income stream.

Bottom line

In conclusion, if you’re looking to secure lifelong income for your TFSA, Canadian Utilities deserves your attention. As a Dividend King it has proven its ability to deliver reliable income to investors. Despite economic fluctuations, Canadian Utilities’s commitment to dividend growth positions it as an ideal choice for long-term income generation — especially as it shifts to further sustainable operations.

With its recent earnings performance and dedication to the energy transition, Canadian Utilities offers the potential for both income and capital appreciation. As you plan your TFSA investment strategy, consider the resilience and reliability that this dividend stock can bring to your portfolio. It could potentially provide you with a source of income for life.

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 no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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