Got $14,000? Turn Your TFSA Into a Cash-Gushing Machine

If you’re looking for passive income, there is one solid stock growing now, with even more to come.

| More on:
Canadian dollars are printed

Source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Two years ago, the annual Tax-Free Savings Account (TFSA) contribution limit was $7,000, and for many Canadians, finding the resources to maximize contributions may have felt like a tall order. Fast forward to today, and if you didn’t manage to invest those funds, you might be sitting on an unused $14,000 contribution room. While it may seem like lost time, this could be the perfect opportunity to turn that uninvested amount into a true wealth-generating tool. By placing that money into a high-potential stock like Lundin Mining (TSX:LUN), you can transform your TFSA into a cash-gushing machine. Here’s how this could work.

Created with Highcharts 11.4.3Lundin Mining PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

Why Lundin?

Lundin Mining has long been a favourite among those interested in the metals and mining industry. Its current stock price, hovering at $12.23, reflects a steady 0.82 percent increase as of this morning. Over the past year, the stock has traded between $9.85 and $17.97, and its current price positions it as an attractive choice for investors looking for growth potential and stability. For a company operating in a sector as volatile as mining, Lundin’s ability to stay competitive is a testament to its strategic focus and operational strength.

The company recently reported an impressive 8.1 percent year-over-year increase in quarterly revenue for the period ending September 30, 2024. With annual revenues totalling $4.15 billion and a gross profit of $1.75 billion over the trailing 12 months, Lundin is demonstrating its ability to thrive even in challenging economic conditions. Its operating margin of nearly 24% is a clear indicator that management has its costs under control while maximizing profitability.

One of the most appealing aspects of Lundin Mining for TFSA investors is its solid dividend. A forward annual dividend yield of 2.97% presents an excellent opportunity to generate passive income. If you were to invest the full $14,000 into Lundin Mining shares, you could collect roughly $415 annually in dividends — all tax-free, thanks to the TFSA. Over time, reinvesting those dividends could further amplify the returns.

Future outlook

Looking back at its performance, Lundin has shown a remarkable ability to adapt to changing market conditions. At the end of 2023, the company’s market cap stood at $8.39 billion. As of writing, that figure has grown to $9.39 billion, illustrating its resilience and steady upward trajectory. This growth aligns with increasing global demand for copper and zinc — metals that are essential for green energy technologies and large-scale infrastructure projects.

Looking ahead, Lundin Mining’s future appears bright. Its forward price-to-earnings ratio of 12.77 suggests that the stock is currently undervalued, with significant room for growth. The global push toward electrification and renewable energy will drive demand for copper, one of Lundin’s primary outputs.

Another crucial consideration is Lundin’s financial stability. The company’s balance sheet reveals $349.62 million in cash, providing it with the flexibility to weather short-term challenges. While its debt-to-equity ratio of 33.97% is slightly elevated, Lundin holds a strong operating cash flow of $1.2 billion and a levered free cash flow of $168.32 million. This demonstrates its ability to manage liabilities effectively while still funding growth initiatives.

Foolish takeaway

For those who may have hesitated to invest over the past two years, the uninvested $14,000 in TFSA contribution room represents an incredible opportunity. Stocks like Lundin Mining allow you to take advantage of both capital appreciation and consistent dividend payouts. With the company trading closer to its 52-week low than its high, the potential for upside is significant. Moreover, by holding the stock in a TFSA, every dollar earned stays entirely in your pocket.

With the right approach, your $14,000 could set the stage for a lifetime of passive income and financial growth. Investing in a stock like Lundin Mining is more than just a decision for today. It’s a step toward securing your financial future. If you’ve been waiting for the perfect moment to make your TFSA work harder, this is it.

Should you invest $1,000 in Lightspeed right now?

Before you buy stock in Lightspeed, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Lightspeed wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

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 Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

a person watches a downward arrow crash through the floor
Dividend Stocks

Is This Correction Your Chance? Top 4 Canadian Dividend Stocks on Sale

Stocks may be down, but now is your chance to get some of these top dividend stocks on sale.

Read more »

Confused person shrugging
Dividend Stocks

Where to Invest $2,500 in the TSX Today

These TSX stocks offer attractive dividends and a shot at decent upside on a rebound.

Read more »

Pile of Canadian dollar bills in various denominations
Dividend Stocks

Invest $25,000 in These Dividend Stocks for $1,956.66 in Annual Passive Income

Dividends stocks can make a huge difference, even if shares don't move an inch. And these might be the best.

Read more »

Pile of Canadian dollar bills in various denominations
Dividend Stocks

Got $5,000? 5 Income Stocks to Buy and Hold Forever

These income stocks have a solid dividend-payout history that can help you earn stress-free passive income.

Read more »

grow money, wealth build
Dividend Stocks

Why I’d Invest $10,000 in This Undervalued Dividend-Growth Stock for Decades of Income

This undervalued dividend stock offers a high yield of over 8% and can help you earn more than $200 in…

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

Here’s Exactly How a $20,000 TFSA Could Potentially Grow to $200,000

Index funds like the iShares S&P/TSX Capped Composite Index (TSX:XIC) are tax free in a TFSA.

Read more »

Dividend Stocks

How I’d Invest $6,000 in Canadian Real Estate Stocks to Build Lasting Wealth

Canadian REITs on sale! See how grocery-anchored retail properties offering 9% yields could turn $6,000 into lasting wealth despite US…

Read more »

rain rolls off a protective umbrella in a rainstorm
Dividend Stocks

Economic Headwinds: Should You Still Consider Buying the Dip?

A market dip might seem like a bumpy road, but it can be far smoother in the future with the…

Read more »