The TFSA (Tax-Free Savings Account) contribution room for 2024 has increased to $7,000, up from $6,500 in 2023 and $6,000 in 2022. One of the most popular registered accounts in the country, the TFSA is tax-sheltered, which means any returns generated in the account are exempt from taxes.
So, it is an ideal account for investors to hold promising dividend stocks that help you generate stable income and benefit from capital gains over time, both of which are tax-free.
Here are two top TSX stocks I’d buy with a $7,000 TFSA contribution in 2024.
Jamieson Wellness stock
Established more than 100 years back, Jamieson Wellness (TSX: JWEL) is valued at $1.3 billion by market cap. Armed with an innovative portfolio of natural health products, Jamieson is among the top health brands in Canada.
In Q3 2023, Jamieson Wellness increased revenue by 91% to $151.5 million with a gross profit of $51.2 million. It ended Q3 with adjusted EBITDA (earnings before interest, tax, depreciation and amortization) of $31.9 million, an increase of 8% year over year.
Jamieson Wellness continues to invest heavily in the U.S. and China as it aims to gain traction in the two largest economies of the world.
Its advancements in these regions allowed the company to increase sales of Jamison Brands by 15% in Q3 as it invests to grow distribution channels, launch innovative products, and cater to the evolving needs of consumers.
Analysts expect Jamieson Wellness to end 2024 with sales of $729 million and adjusted earnings of $1.88 per share. So, the TSX stock is priced at less than two times forward sales and 16.6 times forward earnings, which is quite cheap.
Jamieson’s widening cash flows and consistent profit margins also allow it to pay shareholders an annual dividend of $0.76 per share, indicating a yield of almost 2.4%. These payouts have more than doubled in the last six years.
Analysts remain bullish and expect JWEL stock to surge over 20% in the next 12 months.
Brookfield Renewable stock
Down 44% from all-time highs, Brookfield Renewable Partners (TSX: BEP.UN) is a clean energy giant that currently offers you a tasty dividend yield of 5%. In the last two years, BEP and its peers have trailed the broader markets by a wide margin due to headwinds such as inflation and rising interest rates.
Renewable energy companies are capital-intensive and fuel their expansion plans primarily with debt. Since the start of 2022, the cost of debt has more than doubled, making investors extremely nervous.
But the global transition towards clean energy solutions is accelerating, and Brookfield Renewable is positioned to benefit from this inevitable megatrend.
Brookfield Renewable continues to ramp up production capacity, which should drive future cash flows and dividends higher. For instance, Brookfield’s development pipeline capacity is around 143.4 gigawatts, significantly higher than its current capacity of 31.5 gigawatts.
Due to its rapid expansion, BEP aims to deliver annual returns between 12% and 15% to shareholders in the long term.
Analysts remain bullish and expect the TSX dividend stock to surge by 10% in the next 12 months. After adjusting for dividends, total returns will be closer to 15%.
