Investing in the shares of dividend-paying companies can help you earn regular passive income. Further, one can invest in dividend stocks via a Tax-Free Savings Account (TFSA) to earn tax-free income. With this backdrop, let’s look at three amazing stocks that can help earn $1,830/year combined.
Enbridge
Enbridge (TSX:ENB) is a top stock for earning worry-free passive income, and there are solid reasons behind it. This oil and gas transportation company has a remarkable history of dividend payments and growth. For instance, this Dividend Aristocrat has distributed dividends for over 69 years. Moreover, it has uninterruptedly increased its dividend for 29 years. Further, its dividend has grown at an average annualized rate of 10% during the same period — the highest among its peers.
Enbridge’s highly diversified revenue streams, high asset utilization rate, benefits from regulated cost-of-service tolling arrangements, and power-purchase agreements enable the company to generate solid distributable cash flows (DCF) in all market conditions. This allows Enbridge to pay and increase its dividends, regardless of the economic situation.
The company is poised to benefit from its multi-billion-dollar secured projects, which will drive its future DCF/share. Moreover, the company’s ongoing investments in conventional and renewable energy assets position it well to capitalize on energy demand. Enbridge expects its DCF/share to increase by 4% in 2024. Moreover, it recently announced a 3.1% increase in its dividend for 2024. The stock currently offers an annual dividend of $3.66 per share, translating into a compelling yield of 7.6% based on its closing price of $47.95 on December 13.
Toronto-Dominion Bank
Investors eyeing tax-free passive income might find large-cap Canadian banks an appealing option. In particular, the large Canadian banks are famous for their impressive track record of dividend payouts, making them attractive income-generating stocks. Among the choices within the Canadian banking sector, one may consider investing in Toronto-Dominion Bank (TSX:TD).
This financial services powerhouse has consistently distributed dividends for an impressive 167 years. Noteworthy is Toronto-Dominion Bank’s remarkable dividend growth history. Its dividend sports a compound annual growth rate of 10% since 1998. Additionally, the bank maintains a conservative payout ratio ranging from 40-50%, indicating the sustainability of its payouts.
Looking ahead, Toronto-Dominion Bank’s diversified revenue streams, emphasis on enhancing efficiency, steady credit performance, and robust balance sheet are expected to bolster its earnings and dividend payouts. Apart from organic growth, the bank is poised to benefit from strategic acquisitions. Currently, Toronto-Dominion Bank pays a reliable yield of 4.9%.
Telus
Telus (TSX:T) stands out as a compelling income investment due to its commitment to return cash to its shareholders in all market conditions. The company consistently enhances its shareholders’ return through its multi-year dividend-growth program. Telus disbursed over $1.5 billion in dividends year to date and has distributed approximately $19 billion since 2004.
Telus’s ability to grow its customer base and average revenue per user and focus on reducing churn will support its earnings growth and distributions. Further, Telus’s efforts to expand its 5G and PureFibre coverage augur well for growth.
Telus expects to grow its dividend at a healthy pace in the coming years. Moreover, it offers an attractive yield of 5.8%.
Bottom line
On average, these dependable income stocks offer a dividend yield of 6.1%. This means an investment of $30,000 distributed equally in these stocks will help you earn a tax-free income of approximately $1,830/year.
