3 Canadian Dividend Stocks With a Real Chance of Doubling Your TFSA’s Value

Want TFSA income? These are the top dividend stocks that could truly, actually, seriously double your TFSA’s value in the coming years.

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Often when we think about investing, the first thing we feel is stress, right? Well, imagine this instead. You’re lounging on a sunny beach, sipping your favourite drink, and your TFSA is growing steadily in the background. Sounds dreamy, right? Well, that’s the magic of dividend stocks.

The benefit of dividends

First off, dividend stocks are like the gift that keeps on giving. These stocks pay you a portion of the company’s profits regularly, usually every quarter. It’s like getting a paycheque just for holding onto them! And the best part? When you reinvest those dividends, you can buy more shares, which in turn generate more dividends. This snowball effect can significantly boost your TFSA’s growth over time.

Now, let’s talk about the tax advantage. The TFSA, or Tax-Free Savings Account, is a true gem in the Canadian financial landscape. Any income you earn within this account, including dividends, is completely tax-free. That means more money stays in your pocket, compounding and growing without the taxman taking a cut. Over the long run, this tax-free growth can lead to some pretty impressive gains. 

Canadian dividend stocks also tend to be in stable, reliable sectors like utilities, consumer staples, and financials. These industries are often less volatile and provide consistent returns, making them a safer bet for growing your savings. Plus, many Canadian companies have a strong track record of increasing their dividends over time, providing you with a growing income stream. Now, let’s go over some of the best dividend stocks to double that TFSA.

Royal Bank stock

Royal Bank of Canada (TSX:RY) is the crème de la crème of Canadian banks, and it has been a powerhouse for decades. With strong earnings and a solid dividend history, it’s a favourite among investors.

RBC consistently reports robust earnings, with recent quarters showing strong revenue growth. The diversified business model, spanning personal and commercial banking, wealth management, and insurance, ensures stability and growth. RBC’s Q2 2024 results showed impressive earnings of $4.3 billion. Its diversified revenue streams from personal and commercial banking, wealth management, insurance, and capital markets contribute to its financial strength.

Furthermore, RBC’s acquisition of Brewin Dolphin and HSBC Canada is a strategic move to bolster its international presence and expand wealth management business. Add to this the track record of stock price appreciation and dividend growth. Its current dividend yield is around 4%, with a history of consistent increases, reflecting its commitment to returning value to shareholders.

TD stock

Then we have Toronto Dominion Bank (TSX:TD), which stands out with its strong presence both in Canada and the U.S., providing a balanced exposure to two robust markets. TD consistently delivers strong earnings, with Q2 2024 results showing a net income of $3.4 billion. This stability is due to its diverse business segments, including Canadian and U.S. retail banking, wealth management, and wholesale banking.

Furthermore, the stock looks like a deal right now. TD ’s US$13.4 billion deal to acquire First Horizon Corporation fell through due to regulatory concerns. U.S. regulators raised issues with TD’s anti-money laundering (AML) practices, which ultimately led to the deal’s termination. While these challenges are significant, TD’s fundamentals remain robust. The bank continues to generate strong earnings from its diversified operations in Canada and the U.S. Its commitment to digital innovation and customer service enhancements positions it well for future growth. 

Analysts maintain a cautious but optimistic outlook, suggesting that once the regulatory issues are resolved, TD could rebound strongly. Especially with a 5.5% dividend on hand.

CNR stock

Finally, we have a freight train of opportunity with Canadian National Railway (TSX:CNR). CNR is a leader in the transportation sector, providing extensive rail and intermodal services across North America. Recently it posted strong Q1 2024 earnings, with a net income of $1.2 billion. Its extensive network and efficient operations contribute to its solid financial performance. Plus, CNR offers a 2.1% dividend yield to boot.

CNR’s strategic acquisitions, such as the purchase of TransX, a leading Canadian transportation company, have expanded its logistics capabilities and market reach. And with a consistent stock and dividend increase over the years, it’s a strong buy recommendation by analysts and investors alike.

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 Amy Legate-Wolfe has positions in Royal Bank Of Canada and Toronto-Dominion Bank. The Motley Fool recommends Canadian National Railway. The Motley Fool has a disclosure policy.

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