TFSA 101: The Easiest Way to Earn $579.84 per Year Tax-Free

Earning income doesn’t have to be that difficult. In fact, it can be downright easy! Especially with a TFSA.

| More on:
Blocks conceptualizing Canada's Tax Free Savings Account

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

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.

Created with Highcharts 11.4.3Tc Energy PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

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.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDTOTAL PAYOUTFREQUENCYINVESTMENT
TRP$66.25151$3.84$579.84quarterly$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.

Should you invest $1,000 in TC Energy right now?

Before you buy stock in TC Energy, 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 TC Energy 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 Amy Legate-Wolfe 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 »