Saving and investing are difficult, especially when living costs keep rising. Fortunately, the Bank of Canada has brought down price pressures and lightened the financial burden of Canadians. The inflation rate in October 2024 is down to 2% from a peak of 8.1% in June 2022.
Lower inflation also means a lot for Tax-Free Savings Account (TFSA) users following the announcement of the dollar limit for 2025. Besides a fresh $7,000 annual limit, the accumulated contribution room (2019 to 2025) is now $102,000. So, what can new and old account holders do?
The TFSA is a versatile investment account, and its main features, tax-free money growth and income, are unmatched. You can transform your TFSA into a cash-generating machine.
If your available contribution room is $28,000 (equivalent to four years’ annual contribution), you can quickly produce $2,402.40 in annual passive income or $200.20 monthly from two high-yield small-cap stocks. You also don’t need substantial capital to invest in Fiera Capital (TSX: FSZ) or Firm Capital (TSX: FC).
| Company | Recent Price | No. of Shares | Div per Share | Total Payout | Frequency |
| Fiera Capital | $9.59 | 1,460 | $0.86 | $1,255.60 | Quarterly |
| Firm Capital | $11.48 | 1,220 | $0.94 | $1,146.80 | Monthly |
The table above assumes a $14,000 investment in each stock; the dividend per share and total payout are annual. While the payout frequency differs (quarterly and monthly), the total dividend payment is approximately $200.20 monthly.
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Asset management firm
Fiera Capital is one of the steadiest TSX stocks thus far in 2024. It’s a standout dividend stock because of its market-beating return. At only $9.59 per share, the financial stock is up 74.8% year-to-date. The annual dividend per share of $0.86 corresponds to a hefty 9% dividend (quarterly payout).
The $1 billion global asset management firm offers customized and multi-asset solutions. Its investment platform covers institutional and retail markets as well private wealth clients. Investors gain access to diversified, non-correlated, credit investments in Canada, the U.S., Europe, and the Asia-Pacific region.
Fiera Capital is doing well this year, evidenced by its financial results in the first three quarters. In the nine months ending September 30, 2024, revenue increased 6.1% year-over-year to $504.6 million, while net earnings climbed 38.4% to $32.4 million from a year ago.
Because of easing inflation and improving economic indicators, Fiera Capital is well-positioned to manage risks and seize growth opportunities in Q4 2024 and beyond.
Mortgage Investment Corporation
Firm Capital MIC is enticing to income-focused TFSA investors, given its lucrative dividend offer. At $11.48 per share (+13.5% year-to-date), the yield is 8.2%. However, unlike most dividend payers, the payout frequency is monthly. Based on its dividend history, FC has religiously paid cash every month since January 2013.
Through Firm Capital Corporation, the $421.7 million mortgage investment corporation provides residential and commercial real estate financing. Management’s strategy is simple: focus on selected niche markets under-served by large lending institutions. The result is a $32.1 million average net income from operations in the last three years.
Cash cows
Given their juicy dividend yields, Fiera Capital and Firm Capital are cash cows. Expect little price appreciation, but the cash flows should be non-stop, as they have been for years.
