A Great TSX Stock to Consider Right Now for Your $7,000 TFSA Contribution

This top TSX dividend stock offers a 6.25% yield.

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Retirees who are seeking reliable passive income and younger investors who use their Tax-Free Savings Account (TFSA) to build retirement portfolios have a chance to buy some top Canadian dividend stocks at undervalued prices.

TFSA 2024

The TFSA limit is $7,000 in 2024. This brings the cumulative maximum contribution space to $95,000 for anyone who has qualified every year since the inception of the TFSA in 2009.

All interest, dividends, and capital gains earned inside the TFSA are not taxed. That means the full value can either go right into your pocket as tax-free income or can be reinvested. Seniors who collect Old Age Security (OAS) and have high retirement income should try to make sure they use up their full TFSA contribution space before holding income-generating investments in taxable accounts. The Canada Revenue Agency implements an OAS pension recovery tax of 15% on every dollar of net world income above a minimum threshold. In the 2024 income year, this number is $90,997.

For example, a senior with a 2024 net world income of $100,997 would see their total OAS pension cut by $1,500 in the July 2025 to June 2026 payment schedule. Where possible, it makes sense to avoid or minimize this hit.

Good TFSA stocks

A number of top TSX stocks currently trade at discounted prices due to the impact of rising interest rates. Telecoms, for example, spend a lot of money on capital projects and use debt to fund part of the growth program. Higher borrowing costs put a dent in profits and can potentially drive up expenses to the point where some projects are no longer viable.

That being said, the pullback in the share prices of some great dividend-growth stocks looks overdone.


Telus (TSX:T) trades near $24 per share at the time of writing compared to more than $34 at the high point in 2022.

The company’s core mobile and internet subscription services are required by businesses and households, regardless of the state of the economy, so Telus should be a good stock to own if you are concerned there will be a significant recession.

Telus generated solid results in 2023, despite the headwinds. Full-year consolidated operating revenue rose 9.4%, and free cash flow expanded by 38%. Telus expects free cash flow to increase another 30% in 2024. That should support continued dividend growth.

Challenges in the international subsidiary led to staff cuts and a reduction of financial guidance in 2023. The worst should be over on that front, and the reduction in salary expenses should help offset elevated borrowing costs in 2024.

Telus has increased the dividend annually for more than 20 years. Investors who buy the stock at the current level can get a 6.25% dividend yield.

The bottom line

Ongoing volatility should be expected until there is clear evidence the Bank of Canada will start to cut interest rates. However, Telus pays a great dividend that should continue to grow, and the shares already look cheap. If you have some TFSA cash to put to work, this stock deserves to be on your radar.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

The Motley Fool recommends TELUS. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker owns shares of Telus.

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