Investing $25,000 in a Tax-Free Savings Account (TFSA) is a savvy move for Canadians aiming to generate long-term passive income. By selecting robust dividend-paying stocks, you can enjoy tax-free growth and income, enhancing your financial well-being over time. Two noteworthy options on the TSX are Whitecap Resources (TSX: WCP) and Restaurant Brands International (TSX: QSR). Let’s get into why.
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Whitecap
Whitecap is a Canadian oil and gas producer known for its consistent dividend payments. As of writing WCP’s stock price is approximately $10.30, offering a forward annual dividend rate of $0.73 per share. This translates to a yield of about 7.14%. This attractive yield can provide a steady stream of income within your TFSA.
In its third-quarter 2024 results, Whitecap reported petroleum and natural gas revenues of $890.9 million and a net income of $274.2 million, reflecting a profit margin of 26.47%. The TSX stock also achieved an operating margin of 47.87%, indicating efficient operations.
Analysts maintain a positive outlook on Whitecap, with a consensus price target of $13.61, suggesting a potential upside of over 30% from the current price. The TSX stock’s commitment to returning value to shareholders through dividends and its strategic growth initiatives make it a compelling choice for income-focused investors.
Restaurant Brands
Restaurant Brands, the parent TSX stock of well-known brands like Tim Hortons, Burger King, and Popeyes, is another solid option. As of writing, QSR’s stock trades around $87.11, with a forward annual dividend rate of $3.34 per share, yielding approximately 3.81%. This dividend provides a reliable income stream, complemented by the TSX stock’s global presence and brand strength.
In the second quarter of 2024, Restaurant Brands reported revenue of $2.08 billion, with Tim Hortons’s same-store sales rising by 4.6%. Thus indicating resilience in consumer demand. Despite challenges in the fast-food industry, the TSX stock’s diversified portfolio and strategic initiatives position it for sustained growth.
Looking ahead, Restaurant Brands has outlined ambitious expansion plans, aiming to reach 40,000 restaurants and $60 billion in system-wide sales by 2028. This growth strategy underscores the company’s commitment to enhancing shareholder value through increased market presence and operational efficiency.
Foolish takeaway
By allocating your $25,000 TFSA investment between WCP and QSR, you can benefit from the high dividend yield of Whitecap and the stable, growing dividends of Restaurant Brands. This diversified approach balances exposure between the energy sector and the consumer discretionary sector, potentially enhancing your portfolio’s resilience and income potential. In fact, here is what you could earn in dividends alone from allocating $12,500 toward each stock.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
| WCP | $10.30 | 1,214 | $0.73 | $886.22 | monthly | $12,500 |
| QSR | $87.11 | 143 | $3.34 | $477.62 | quarterly | $12,500 |
You could have $1,363.84 in passive income each year! Remember, while both companies offer attractive dividends and growth prospects, it’s essential to assess your risk tolerance and investment objectives. Diversification and regular portfolio reviews are key to maintaining a healthy investment strategy. Consulting with a financial advisor can provide personalized guidance tailored to your financial goals.
