2 Magnificent Dividend Stocks I Plan to Add to My TFSA in June

Have you made your TFSA investments for June? If not, here are two dividend stocks you should consider adding for decades of passive income.

| More on:
The TFSA is a powerful savings vehicle for Canadians who are saving for retirement.

Source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It is already mid-year. If you haven’t yet made any contributions to your Tax-Free Savings Account (TFSA), now is a good time, as the TSX is set to revive in the second half. Now is your last chance to make the most of the two-year-long downtrend and buy some magnificent dividend stocks at their dip. Buying this dip will give you a dual advantage of locking in a higher dividend yield for decades, and you will also see your invested amount appreciate as the stock price recovers.

Magnificent dividend stocks to add to your TFSA

Two dividend-paying giants are undergoing major restructuring, as they look to enhance shareholder value. Their restructuring is going as scheduled, increasing confidence in their future cash flows and dividend-paying capacity.

TC Energy stock

Created with Highcharts 11.4.3Tc Energy PriceZoom1M3M6MYTD1Y5Y10YALL6 Apr 20203 Apr 2025Zoom ▾Jul '20Jan '21Jul '21Jan '22Jul '22Jan '23Jul '23Jan '24Jul '24Jan '252021202120222022202320232024202420252025304050607080www.fool.ca

TC Energy (TSX:TRP) is the oil and gas pipeline company famous for its Keystone Pipeline. The company has been transitioning its portfolio from oil to gas for years. It gave this strategy a major push last year when it announced the spinoff of its oil pipeline company that will trade as South Bow Corporation. Shareholders voted in favour of the spinoff in June. TC Energy shareholders will receive one share of South Bow for every five shares of TC Energy. 

While the spinoff is going as planned, so are the new projects. Approximately $5.3 billion of projects were put in service in 2023, and that too on budget. This is important given that TC Energy’s Coastal GasLink pipeline project went way over budget from the projected $6.6 billion to the actual cost of $14.5 billion. The company paid $1.4 billion over budget from its profits in the first quarter of 2023. TC Energy expects to place approximately $7 billion of new projects in service in 2024.

Another thing going right for TC Energy is its divestiture plan. It divested $5.3 billion worth of assets in 2023 and used the proceeds to reduce debt. For 2024, it aims to divest another $3 billion worth of assets and reduce its debt to 4.75 times the earnings before interest, taxes, depreciation, and amortization (EBITDA).

With things falling into place, the pipeline company announced a 3.2% dividend growth for 2024, the 24th consecutive year of dividend growth. Even after the spinoff, TC Energy expects to grow its dividend by 3-5% and South Bow by 2-3%. Now is the last chance to buy the stock before the spinoff and give your passive income the benefit of two income streams.

BCE

Created with Highcharts 11.4.3Bce PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

One of Canada’s oldest telecom operators BCE’s (TSX:BCE) stock price began descending in April 2022 and has since fallen 36%. It is because the telecom industry has been going through a tough time. High interest rates increased the cost of capital at a time when the telco accelerated its capital spending. Hence, the stock price descended when the interest rate hike began. The Bank of Canada’s interest rate cut has set the stage for the stock price to surge.

At the time of the writing, BCE stock was trading at $47 after recovering from its 10-year low of $43.96. The stock surged 3% ahead of the interest rate cut. Another major event that pulled down BCE’s stock price was the regulator’s request to give competitors access to its network infrastructure. The talks are underway, and the telco has proposed conditional access that will not impact its returns on network upgrades. The outcome remains uncertain.

In the meantime, BCE is strengthening its business proposition, converting from a telco to a techno company focused on cloud service, cybersecurity, and digital ads. The era of 5G will drive the need for a secure cloud network. BCE is selling its low-return businesses like radio stations and electronics stores to focus on the upcoming high-return businesses.

This transition has pressured its dividend as its 2023 payout ratio surpassed 100% to 113%. With free cash flow expected to fall due to restructuring expenses, the payout ratio could surpass 113% in 2024. Investors are worried about a dividend cut, and their concerns are valid. However, the new techno-driven BCE could make up for the cut, if any, with accelerated dividend growth.

Should you invest $1,000 in Terravest Industries right now?

Before you buy stock in Terravest Industries, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Terravest Industries wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

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.

Fool contributor Puja Tayal has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

A close up color image of a small green plant sprouting out of a pile of Canadian dollar coins "loonies."
Dividend Stocks

I’d Put $15,000 in These 3 Dividend-Growth Champions for Increasing Income Potential

Want to offset some volatility? Here are three defensive dividend-growth champions that can generate a juicy yield right now.

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

Transform Your TFSA Into a Cash-Creating Machine With $7,000

Discover how the Tax-Free Savings Account can be your golden goose for generating cash without losing your investment.

Read more »

monthly desk calendar
Dividend Stocks

How I’d Invest $10,000 in Canadian Value Stocks for Monthly Dividend Income

A $10,000-diversified portfolio of value stocks focusing on dividend safety, yield, growth, and payment schedules can provide a reliable source…

Read more »

a person watches a downward arrow crash through the floor
Dividend Stocks

Is This Correction Your Chance? Top 4 Canadian Dividend Stocks on Sale

Stocks may be down, but now is your chance to get some of these top dividend stocks on sale.

Read more »

Confused person shrugging
Dividend Stocks

Where to Invest $2,500 in the TSX Today

These TSX stocks offer attractive dividends and a shot at decent upside on a rebound.

Read more »

Pile of Canadian dollar bills in various denominations
Dividend Stocks

Invest $25,000 in These Dividend Stocks for $1,956.66 in Annual Passive Income

Dividends stocks can make a huge difference, even if shares don't move an inch. And these might be the best.

Read more »

Pile of Canadian dollar bills in various denominations
Dividend Stocks

Got $5,000? 5 Income Stocks to Buy and Hold Forever

These income stocks have a solid dividend-payout history that can help you earn stress-free passive income.

Read more »

grow money, wealth build
Dividend Stocks

Why I’d Invest $10,000 in This Undervalued Dividend-Growth Stock for Decades of Income

This undervalued dividend stock offers a high yield of over 8% and can help you earn more than $200 in…

Read more »