TFSA (Tax-Free Savings Account) investors looking to put some money to work in dividend stocks may wish to check the slate of high-yielding names while they’re pulling back a bit off their 52-week highs.
Undoubtedly, the recent interest rate cuts have been welcomed by many firms as they cut down on their borrowing costs. That said, going into the new year, the Bank of Canada may not be so quick to reduce rates further in the face of potential tariff threats. Indeed, it’s way too early to tell how things will pan out and how the Bank of Canada will correct course.
Either way, I think long-term investors shouldn’t fret over the matter. Instead, picking up shares of wonderful high-yielding dividend plays seems wise as they look to take a bit of a hit in anticipation of a potential reduction in the pace of rate cuts.
In this piece, we’ll look at two absolute cash cows that could give your TFSA passive income fund a bit of a boost. As always, investors should put in the extra homework before loading up on any shares as both names have been dealing with a slew of pressures in recent quarters.
In any case, let’s check in on one high-yield telecom stock and a well-run REIT to figure out which name is a better fit this December.
Telus
Telus (TSX:T) stock is down close to 37% from its 2022 all-time high after sinking 9% year to date. Undoubtedly, the negative momentum may have slowed down, but it’s still too early to say if the bottom is in. For TFSA income investors tempted by the stock’s colossal (and still growing) 7.5% dividend yield, I’d argue that buying today and on further weakness may be the way to go.
With a more secure dividend than its higher-yielding peer in the telecom scene, I do see any additional weakness as buyable, provided one plans to stick around for the long haul. With such a juicy payout, there’s plenty of reason to hold (or buy more) shares if they were to fall back to or below the $20 level.
Though the right catalysts may not be in place, I still view T stock as a dividend titan worth stashing away in a TFSA for the next decade or beyond. The dividend is just too swollen to pass up!
CT REIT
CT REIT (TSX:CRT.UN) is one of the more interesting value plays in the REIT (real estate investment trust) space today. Shares are currently going for $15.23 per share while offering a solid 6.1% distribution yield.
Of course, CT REIT leans very heavily on Canadian Tire, a well-run Canadian retailer that likely won’t miss a month’s rent, even in the worst of economic downturns. While some would prefer a retail REIT with a more diversified tenant base, I’d argue that it’s far better to have the most exposure to one top-notch tenant that can be relied upon through thick and thin. There’s a reason why CT REIT’s occupancy rate is so incredibly high.
If you’re a fan of Canadian Tire and want a higher-yielding way to ride on its coattails, I’d look to CT REIT on the recent 6.2% pullback off 52-week highs.
