Canadians can use the TFSA (Tax-Free Savings Account) to create a passive-income stream for life by holding blue-chip dividend stocks in this registered account. You need to hold a portfolio of quality dividend-paying stocks that have high yields, widening earnings bases, and sustainable payout ratios.
As any gains earned in the TFSA are exempt from Canada Revenue Agency taxes, you can either withdraw the dividends or reinvest them to benefit from higher payouts over time. Further, long-term Canadian investors are also positioned to benefit from capital gains.
In 2024, the maximum cumulative TFSA contribution for individuals has increased to $95,000. So, for couples, the TFSA limit doubles to $190,000. Let’s see where you can invest $50,000 to create a recurring dividend stream in 2024 and beyond.
Enbridge stock
A Canada-based energy infrastructure giant, Enbridge (TSX: ENB) offers you a dividend yield of more than 7%. While Enbridge is part of the highly cyclical energy sector, its cash flows are backed by long-term contracts indexed to inflation.
Its steady cash flows have enabled Enbridge to increase its dividends by 10% annually in the last 28 years, which is exceptional.
Telus stock
A telecom heavyweight, Telus (TSX: T) is part of a recession-resistant sector and offers you a forward yield of more than 6%. Despite an uncertain macro economy, Telus has increased sales by 7.5% and EBITDA (earnings before interest, tax, depreciation, and amortization) by 5.5% in the third quarter (Q3) of 2023.
Its earnings growth should support dividend hikes in 2024. Further, the TSX stock is also priced at a discount of 10% to consensus price target estimates.
Bank of Nova Scotia stock
Among the largest banking companies in Canada, Bank of Nova Scotia (TSX: BNS) offers you a yield of 6.8%. A highly regulated banking environment in the country allows BNS to benefit from an entrenched position and leading market shares across business segments.
Priced at 10 times forward earnings, BNS stock is very cheap and should gain momentum if interest rates are lowered in the next 12 months.
Brookfield Renewable stock
A clean energy behemoth, Brookfield Renewable (TSX: BEP.UN) is a company that can help you derive game-changing returns in the next two decades. The worldwide shift towards renewable energy should attract trillions of dollars, making BEP a top investment choice right now.
Currently, the TSX stock has a dividend yield of 5% and should be part of your equity portfolio today.
Fortis stock
The final dividend stock on my list is Fortis (TSX: FTS), which yields 4.4%. An electric and gas utility company, Fortis has operations in Canada, the U.S., and the Caribbean.
Its cash flows are regulated, allowing Fortis to increase its dividends every year for 50 years, the second-highest streak for a Canadian company.
The Foolish takeaway
Investing a total of $50,000 distributed equally in these TSX dividend stocks can help you earn $3,000 in annual dividend income. In case the payouts rise by 7% each year, the dividend earned will double in the next 10 years, enhancing the effective yield significantly.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| Enbridge | $48.26 | 207 | $0.915 | $189 | Quarterly |
| Bank of Nova Scotia | $62.38 | 160 | $1.06 | $170 | Quarterly |
| Telus | $24.35 | 411 | $0.375 | $154 | Quarterly |
| Brookfield Renewable | $34.93 | 286 | $0.4475 | $128 | Quarterly |
| Fortis | $53.40 | 187 | $0.59 | $110 | Quarterly |
Each of the five TSX stocks listed here has survived multiple recessions and enjoys a predictable stream of cash flows. You can identify other such blue-chip stocks with high dividend yields and further diversify your TFSA portfolio.
