Investing $7,000 in your Tax-Free Savings Account (TFSA) is not just a smart move. It’s a strategic one. The TFSA allows Canadians to invest in stocks, exchange-traded funds (ETF), and other securities without worrying about taxes on the gains. Whether you’re earning dividends, benefiting from capital appreciation, or simply letting your investments grow over time, a TFSA provides a tax-sheltered environment to maximize your returns. By contributing the full 2024 annual limit of $7,000, you’re putting your money to work in one of the most efficient ways possible.
Consider BIP stock
When it comes to picking the right investment, Brookfield Infrastructure Partners (TSX:BIP.UN) stands out as a stellar choice. As a global infrastructure leader, BIP.UN owns and operates essential assets across utilities, transportation, midstream, and data infrastructure. These assets aren’t just stable. They’re indispensable to everyday life, meaning the company generates predictable and reliable cash flows regardless of economic cycles. For a TFSA investor seeking passive income, this stability is pure gold.
Currently trading at around $47.60 as of December 13, 2024, BIP.UN offers an impressive forward annual dividend of $2.27 per unit, translating to a yield of approximately 4.78%. Dividends like these make it an excellent pick for passive-income seekers. Unlike other income sources that may be taxed or eroded by inflation, the dividend income you earn in your TFSA is entirely tax-free, allowing you to reinvest and grow your portfolio faster.
Brookfield Infrastructure’s recent performance showcases its strength and resilience. In the third quarter of 2024, the company reported funds from operations (FFO) of $599 million. Thus marking a solid 7% year-over-year increase. Even in the face of challenges like rising interest rates and fluctuating exchange rates, BIP.UN managed to deliver impressive results, underscoring its ability to adapt and thrive.
Looking ahead
The future outlook for BIP.UN is equally promising. With the growing global demand for infrastructure related to energy, digital connectivity, and sustainable solutions, Brookfield Infrastructure is uniquely positioned to capitalize on these trends. The dividend stock has a robust investment pipeline and continues to recycle capital effectively, having met its $2 billion recycling target for the year. This strategy allows BIP.UN to fund new high-yield investments while maintaining a strong balance sheet.
Diversification is another key strength of BIP.UN. Unlike dividend stocks that rely heavily on one sector or region, Brookfield Infrastructure operates across multiple industries and geographies. This diversification not only mitigates risks but also ensures consistent cash flow. Whether it’s providing utilities in North America, running ports in South America, or managing data centres in Europe, the company’s operations are critical to the functioning of modern economies.
For long-term investors, BIP.UN also offers compelling valuation metrics. Despite its strong fundamentals and consistent performance, the dividend stock remains attractively priced with a forward price-to-earnings ratio of 53.48 and a price-to-book ratio of 2.78. This suggests room for growth, especially as the dividend stock continues to expand and adapt to emerging opportunities in sectors like artificial intelligence (AI) and renewable energy infrastructure.
Bottom line
Adding BIP.UN to your TFSA not only aligns with a strategy for generating passive income. It also provides an avenue for capital appreciation. The stock’s 52-week range, which peaked at $50.46, indicates resilience and potential for further gains. In fact, investing $7,000 today could create immense passive income, as seen below, should shares rise by 18% once more.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | INVESTMENT |
| BIP.UN – now | $47 | 149 | $2.27 | $338.23 | quarterly | $7,000 |
| BIP.UN – 18% | $55.46 | 149 | $2.27 | $338.23 | quarterly | $8,263.54 |
Yep, you now have $1,263.54 in returns and $338.23 in dividends, totalling $1,601.77 in passive income! The combination of tax-free growth, a strong and growing dividend, stable cash flows, and a promising outlook makes investing $7,000 in your TFSA a brilliant financial decision. Choosing BIP.UN as part of your strategy ensures you’re investing in a company with a proven track record, resilient business model, and bright future. Whether you’re looking for immediate passive income or long-term wealth creation, BIP.UN offers the perfect blend of stability and growth potential to help you achieve your financial goals.
