TFSA: 3 Top TSX Stocks for Your $7,000 Contribution

Dividend stocks like these are your best option when trying to make that $7,000 contribution room work as much for you as possible.

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published September 25, 2024 9:15 pm EDT

The Tax-Free Savings Account’s (TFSA’s) $7,000 contribution limit for 2024 is a fantastic opportunity to create a passive-income stream, and here’s why. By investing that contribution in dividend-paying stocks, exchange-traded funds (ETF), or other income-generating assets, Canadians can watch your money work for you without lifting a finger. So, with a strategic approach, that $7,000 can set the stage for a delightful passive-income journey! Here are some stocks to consider.

Dream Industrial

Dream Industrial REIT (TSX: DIR.UN) is shaping up to be a strong option for investors looking for solid returns. With a market cap of around $4.16 billion and a forward annual dividend yield of 4.87% at writing, DIR.UN offers an appealing balance between income and growth potential. The company has a solid track record with a profit margin of 37% and an impressive operating margin of 71.21%. This suggests effective cost management and a robust business model. Plus, it recently reported revenue of approximately $480.64 million, thereby indicating its ability to generate consistent income, making it a reliable choice for dividend-seeking investors.

Moreover, DIR.UN’s focus on industrial properties positions it well to benefit from the growing demand for logistics and warehousing, especially in today’s e-commerce-driven market. Its strategic acquisitions and property management initiatives help maintain a strong occupancy rate. This further supports stable cash flows. With a current ratio of 0.40 and total cash per share of $0.37, the real estate investment trust (REIT) demonstrates prudent financial management, thus ensuring it can meet short-term obligations while still providing attractive returns to shareholders. As such, investing in DIR.UN could be a savvy move for those looking to enhance their portfolio with a blend of steady income and growth potential!

Allied Properties

Allied Properties REIT (TSX: AP.UN) is shaping up to be a strong contender for investors looking for reliable income and growth in the real estate sector. With a forward annual dividend yield of 9.48% at writing, it offers an attractive income stream for those seeking to enhance their portfolios. Despite recent challenges, including a profit margin that reflects some volatility down 89.93%, the REIT has an impressive operating margin of 46.83%. Thus showcasing its operational efficiency. The company’s revenue for the trailing 12 months stands at approximately $582.68 million. And with a year-over-year growth of 7.30%, suggesting that it is effectively navigating the market.

Moreover, AP.UN’s strategic focus on high-quality properties and its ability to maintain a significant share of institutional holdings demonstrates strong investor confidence. With a manageable payout ratio of 398.95%, the REIT is poised to maintain its dividends even in fluctuating market conditions. The current market cap of approximately $2.65 billion indicates that it has a robust foundation for future growth. Especially as it capitalizes on evolving trends in the real estate market.

Diversified Royalty

Diversified Royalty (TSX: DIV) is an appealing option for investors seeking solid dividend income and potential growth. With a forward annual yield of 8.62% at writing, this stock offers an enticing income stream that can be especially attractive for those looking to boost their passive income. The company has demonstrated strong profitability, boasting a profit margin of 51.17% and an impressive operating margin of 89.42%. This speaks to its operational efficiency. Plus, DIV’s quarterly revenue growth of 18.60% indicates that it’s effectively expanding its revenue base, thereby making it a compelling choice for long-term investors.

Moreover, the financial stability of DIV is highlighted by its robust cash flow management, with operating cash flow standing at $39.88 million. With a safe payout ratio of 89.69%, the company maintains a strong current ratio of 5.73, suggesting it can easily cover its short-term liabilities. This balance between income potential and operational strength makes DIV a solid investment choice for those looking to build wealth through dividends — all while enjoying exposure to a diverse portfolio of revenue-generating assets.