TFSA Investors: 2 Passive-Income Stocks You Can Safely Hold for Decades

Investors looking to give themselves a nice raise should consider SmartCentres REIT (TSX:SRU.UN) and another great income play!

TFSA (Tax-Free Savings Account) investors have plenty of reasons to put their latest contribution to work on passive-income plays. Indeed, the broader basket of low-cost dividend stocks has appreciated a great deal from last year’s lows. However, if rates have, in fact, peaked, I think yield-heavy securities could be in a spot to gain for investors over the next three years after delivering somewhat mixed performance since the pandemic began.

In this piece, we’ll look at two passive income powerplays that I believe combined the best of both worlds: a great yield and a relative degree of safety.

Of course, investors will need to be patient with the following income plays if they seek a side of gains alongside their dividend (or distribution) payments through the year.

Without further ado, let’s check out shares of hard-hit Canadian bank TD Bank (TSX: TD) and dirt-cheap retail REIT SmartCentres REIT (TSX: SRU.UN).

TD Bank

TD Bank stock finished last year with a nice surge. Though the bounce off lows wasn’t as impressive as some of its peers in the Big Six banking scene, I view the move as a reason to breathe a nice sigh of relief. After all, 2023 was a hectic year for the bank, with the falling through of its First Horizons deal as regional banks in the United States took a massive hit to the chin almost one year ago.

It’s been a lousy 2024 for TD Bank stock thus far, with shares down more than 4% in just under two weeks of trading. Indeed, sudden pullbacks are to be expected after a significant rally off lows. Though TD Bank stock has been quite the dud in the past two years, down 18% over the timespan, I don’t view TD stock as falling substantially below its 52-week lows of around $76.

I view the level as having strong support. As such, income investors interested in the 4.91% yield have my blessing to buy a few shares after the stock’s ugly start to the year. At this pace, I view TD as being an even better deal than some of its rivals. At the end of the day, you’re getting a strong bank with exposure to both sides of the border (Canada and the U.S.) and one of the smartest management teams in the industry.

SmartCentres REIT

SmartCentres REIT is a strip mall-focused REIT with growing exposure to the residential scene. Shares collapsed violently last year but experienced a nice relief rally going into year-end. Indeed, the Santa rally was kind to SmartCentres REIT in 2023. Only time will tell if SRU.UN can surge even higher from here.

Regardless, I’m attracted by the 7.32% distribution yield alongside the newfound momentum. The payout looks safe, and the path higher may be the likeliest for the new year. Either way, Smart owns some great properties that will continue to generate impressive sums of cash. So, while the focus of many market participants is on generative artificial intelligence, investors may wish to focus more on cash-generative firms with juicy payouts.

Also, since REIT distributions don’t get the same tax-favourable treatment as dividends from Canadian firms, perhaps a spot in your TFSA is deserved! As always, put in your own homework on a security and optimal tax-allocation strategies before you pick up shares.

Fool contributor Joey Frenette has positions in SmartCentres Real Estate Investment Trust and Toronto-Dominion Bank. The Motley Fool recommends SmartCentres Real Estate Investment Trust. The Motley Fool has a disclosure policy.

More on Dividend Stocks

ETFs can contain investments such as stocks
Dividend Stocks

How to Use a TFSA to Generate $200 in Monthly Tax-Free Income

Use a TFSA to build $200 in monthly tax-free income with XEI and ZRE. See how these ETFs work and…

Read more »

Business success of growth metaverse finance and investment profit graph concept or development analysis progress chart on financial market achievement strategy background with increase hand diagram
Dividend Stocks

Smart Ways to Invest Extra Income and Say Goodbye to Financial Stress

Canadians have ways to make their extra income work as hard as they do and say goodbye to financial stress.

Read more »

Two seniors walk in the forest
Dividend Stocks

Sun Life Stock Pays 3.3%: How Much to Invest for $100 a Month in Dividends

Sun Life Financial (TSX:SLF) might be a massive bargain after Thursday's vicious plunge as stock markets sold off hard.

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

How to Turn Your TFSA Into $1,000 a Month in Tax-Free Income

Build toward $1,000 a month in tax-free income with a TFSA. See how Enbridge, Scotiabank and ZWC could help, and…

Read more »

customer fills up car with gasoline
Dividend Stocks

How Much Emergency Money Do Canadians Actually Need?

A safety fund equivalent to 3 to 6 months of living expenses is generally the baseline buffer that Canadians would…

Read more »

woman holding steering wheel is nervous about the future
Dividend Stocks

Still Up Double Digits This Year: Should You Still Invest in TSX Stocks After Thursday’s Dramatic Drop?

The TSX has gained about 136% over the past decade. So, stay invested, dollar‑cost average, and maintain diversification. 

Read more »

Real estate investment concept
Dividend Stocks

Intact Stock: Would I Buy It for Growth, Income, or Both?

Intact’s modest yield makes profitable long-term growth the main attraction, with catastrophe losses putting the next purchase to a test.

Read more »

hiker with backpack in the mountains
Dividend Stocks

2 Top Canadian Dividend Stocks for $1,850 in Annual Passive Income

With reliable cash flows, high dividend yields, and strong growth prospects, these two Canadian stocks suit income-seeking investors.

Read more »