If you’re looking for a simple and tax-efficient way to earn passive income in Canada, utilizing your Tax-Free Savings Account (TFSA) can be one of the best strategies out there. The TFSA allows you to grow your investments tax-free, meaning any gains, including dividends, remain untouched by the taxman. The best part? You can withdraw funds at any time without penalty. Among the many investment options within a TFSA, dividend stock TC Energy (TSX:TRP) stands out for its consistency, reliability, and potential for steady income.
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Recent performance
TC Energy is a dividend stock that has consistently delivered for its shareholders, making it a great candidate for a TFSA. The company, which specializes in energy infrastructure, including pipelines and power generation, is known for its robust financial performance and ability to pay generous dividends. In its most recent earnings report for Q2 2024, TC Energy posted strong results, with quarterly revenue growth of 6.7% year-over-year. Earnings per share (EPS) saw an impressive increase of 262.6%, further bolstering investor confidence.
One of the reasons TC Energy is a great option for TFSA investors is its dividend history. As of October 2024, the dividend stock offers a dividend yield of around 5.8%, with an annual dividend rate of $3.84 per share. It has a long track record of dividend payments, maintaining its status as a reliable income generator for shareholders. Even though its payout ratio is over 100%, signalling that it distributes more in dividends than its earnings, TC Energy has a strong history of cash flow. This supports its ability to maintain these payments.
Solid base
In terms of management, TC Energy is well-regarded for its leadership team’s experience in the energy sector. The company’s CEO, François Poirier, has been instrumental in steering TC Energy through a rapidly evolving energy landscape. His focus on both traditional energy and renewable projects provides the company with a balanced approach, positioning it well for the future. Under his leadership, TC Energy continues to expand its portfolio and improve its operational efficiency. And this is great news for long-term investors.
Looking to the future, TC Energy’s outlook remains bright. With rising global demand for energy, particularly in North America, the dividend stock’s pipeline network and energy infrastructure projects are expected to continue generating substantial cash flow. Its ongoing investments in renewable energy projects, such as wind and solar, also align with future energy trends, thus offering additional growth potential. Analysts are optimistic about the company’s ability to maintain its strong dividend and revenue performance over the long term.
Earning income
For investors using a TFSA, TC Energy offers a compelling opportunity. Not only does it provide a steady stream of passive income through dividends. It also comes with the added benefit of growth potential as the company diversifies its energy portfolio. The tax-free environment of a TFSA amplifies the attractiveness of this stock. You can reinvest your dividends or take advantage of compounding gains without worrying about taxes. In fact, if you want to create ample income, here’s what a $10,000 investment could bring in annually.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | INVESTMENT |
| TRP | $66.25 | 151 | $3.84 | $579.84 | quarterly | $10,000 |
Bottom line
All considered, earning passive income through a TFSA doesn’t have to be complicated. And investing in dividend stocks like TC Energy is one of the easiest ways to achieve it. With a strong dividend history, solid management, and a promising future, TC Energy checks all the boxes for a reliable source of income and growth. It’s a smart choice for any investor looking to build long-term wealth. All while enjoying the tax benefits a TFSA offers.
