Transform Your TFSA Into a Cash-Generating Machine With Just $28,000

Canadians can turn their TFSAs into a cash-generating machine with money equivalent to four years’ contribution limits.

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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).

CompanyRecent PriceNo. of SharesDiv per ShareTotal PayoutFrequency
Fiera Capital$9.591,460$0.86$1,255.60Quarterly
Firm Capital$11.481,220$0.94$1,146.80Monthly

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.

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).

Created with Highcharts 11.4.3Fiera Capital PriceZoom1M3M6MYTD1Y5Y10YALL6 Apr 20203 Apr 2025Zoom ▾Jul '20Jan '21Jul '21Jan '22Jul '22Jan '23Jul '23Jan '24Jul '24Jan '252021202120222022202320232024202420252025246810www.fool.ca

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.

Created with Highcharts 11.4.3Firm Capital Mortgage Investment Corporation PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

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.

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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 Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends Fiera Capital. The Motley Fool has a disclosure policy.

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