When you are building a passive-income portfolio in your Tax-Free Savings Account (TFSA), there are several factors you need to consider. The yield and sustainability of the dividend stocks you choose are significant factors to consider, but there are others. Many investors tend to stick to well-known, well-understood blue chips, but if you limit yourself to that specific pool of assets, you may end up losing the opportunity to acquire some rare gems.
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A rare dividend gem
MCAN Mortgage (TSX: MKP) is a small-cap dividend stock that often tends to fly under the radar of most investors, especially the ones that select dividend stocks only from the big-cap pool. At a market capitalization of $718 million, MCAN isn’t even in the top half of small-cap. But it has been a promising dividend payer for years now.
It’s currently offering a mouth-watering yield of about 8.4%, which is backed by a safe payout ratio of 64%. The dividend history is also impressive as the company has grown its payouts consistently and conservatively (the last growth was just one cent) for the last five years. And if you need another reason to consider this stock, the price-to-earnings ratio of 7.5 that makes it attractively valued, can be it.
A bank stock
A good portfolio doesn’t have to be either blue chips or hidden gems like MCAN. It can be a good combination of both. Bank stocks tend to be among the safest dividend picks in Canada, and most of them have dividend histories that stretch back decades. Bank of Nova Scotia (TSX: BNS) is an easy pick if your goal is maximum yield. The bank is currently offering payouts at a yield of about 5.8%.
The bank has been growing its payouts for well over a decade, and like others in the Big Five, it’s a well-established Dividend Aristocrat. If you are looking for a more conventional check for sustainability (the payout ratio), the bank’s dividends seem safe enough with a payout ratio of about 72% (compared to dividend stocks in general), but it’s higher than what most banks usually aim for.
An energy stock
Enbridge (TSX: ENB) is one of the most prominent and common dividend picks from the energy sector for a number of reasons, starting with its dividend growth streak. It’s a well-established Dividend Aristocrat and offers dividend safety not via a financial metric like payout ratio but through its business model and mix. As a mid-stream giant, its business model is entirely secure, and as for the business mix, a sizable portion of its earnings comes from its natural gas utility operations.
The stock is currently riding a powerful bullish momentum and has risen about 36% in the last 12 months alone, which is quite significant for a giant this size. Despite this bullish phase, it offers an attractive dividend yield of about 5.9%.
Foolish takeaway
The three stocks, including two blue-chip stocks and a small-cap dividend gem (MCAN), can help you build a robust passive-income portfolio (or augment an existing one) in your TFSA. Since all three are growing dividends regularly, this passive-income stream can also stay ahead of inflation, at least to a reasonable extent.
