If the Tax-Free Savings Account (TFSA) is a cuisine, a ‘par excellence’ rating is appropriate. The investment account is a safe place to store income-producing assets. Money growth and fund withdrawals are tax-free. There are tax implications, but only if you over-contribute or do frequent trading, which the Canada Revenue Agency (CRA) doesn’t allow.
Regarding contributions, the CRA sets new annual limits so users can save and invest for short- and long-term financial goals, including retirement. Maximize your $7,000 contribution limit in 2024 by investing in dividend titans Bank of Nova Scotia (TSX:BNS), Enbridge (TSX:ENB), and BCE (TSX:BCE).
Cream of the crop
The dividend titans mentioned above belong to the S&P/TSX 60 Index, or Canada’s cream of the crop. The 60 large corporations come from various sectors, except healthcare and real estate. BNS, Enbridge, and BCE are ideal holdings in a TFSA because they pay the highest dividends in their respective sectors.
Your $7,000 contribution transforms into regular quarterly income. Allow your balance to grow or compound faster by reinvesting the dividends. By contributing regularly (the maximum limit, ideally), you should have a sizable retirement fund in the sunset years.
Big Bank
TSX’s Big Bank stocks are rock-solid investments and excellent options if you’re in the market for the long haul. BNS, Canada’s fourth-largest bank, has a mean dividend track record. The $76.6 billion lender has been paying dividends since 1832.
In exchange for the $63.11 per share today is a generous 6.72% dividend and peace of mind. The timing to purchase is perfect since BNS is down nearly 7% from a year ago. The chances of price appreciation are high when the central bank starts reducing interest rates.
Energy behemoth
Energy is also a heavyweight sector in the TSX after financials. Many investors regard Enbridge as the premier constituent. The $100.9 billion energy infrastructure company derives revenues from five segments: Liquids Pipelines, Gas Transmission & Midstream, Gas Distribution & Storage, Renewable Power Generation, and Energy Services.
Management said the diversification ensures stability and resilience against market fluctuations. Enbridge is a dividend aristocrat owing to 27 consecutive years of dividend increases. If you invest today ($47.51 per share), the dividend offer is a mouthwatering 7.7%. In a TFSA, a $7,000 position will produce $134.75 tax-free quarterly income.
Dominant telco
BCE needs no hard sell as everyone is familiar with its telecom services. The $48.6 billion company is the largest in the communications services sector. Like BNS, the stock’s dividend payment history is more than 100 years. If you invest today, the share price is $53.23, while the dividend yield is 7.27%.
No one can dispute BCE’s position as a cash cow in the stock market. It makes $2.7 billion every year in profits. The payout ratio is high but not a material concern because the business is capital-intensive. Still, BCE boasts a dividend growth streak of 14 years.
Maximum ROI
Besides achieving multiple financial goals, holding dividend titans is a sound strategy to make the most of your TFSA contributions. You also get the maximum return on your BNS, Enbridge, and BCE investments.
