Tax-Free Savings Account (TFSA) values have risen to an all-time high or an average balance of nearly $45,000 last year, according to the Bank of Montreal Investment Survey. The 2025 annual contribution limit is $7,000, and poll respondents plan to contribute $6,499 on average to their TFSAs this year.
Canadians see the TFSA as a powerful investment account. Because you pay zero taxes on investment earnings, you can grow your TFSA balance 10-fold in the long run. The strategy is to max out the yearly contribution limits, if possible, or with regular contributions.
Dividend stocks are preferred holdings of many TFSA investors. Reinvest the dividends to take advantage of the power of compounding. Since money growth is tax-free, a $20,000 position can turn into $200,000. A yield of 8.295% will bring you to your goal in 30 years, although the balance should already be substantial in 25 years ($146,635.84).
Atrium (TSX: AI) and Firm Capital (TSX: FC), both mortgage investment corporations (MICs), are dividend titans trading below $12 per share. The yields are 8.64% and 7.95%, respectively, or an average of 8.295%. MICs extend mortgages to borrowers who may not qualify at banks or traditional financial institutions. The companies distribute income or mortgage interest to shareholders as dividends.
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Monthly dividends plus more
Atrium trades at only $10.77 per share and has delivered decent returns in the last five years (+88.72%). The $508.98 million MIC has been around since 2001, providing financing solutions to commercial real estate and development clients. The stability and liquidity of real estate in the major metropolitan areas (Ontario and B.C.) it operates are high. Besides flexibility and reliability, customers patronize Atrium for its fast turnaround time.
In 2024, revenue and net income declined 1% and 7% year over year to $97.3 million and $47.8 million. Nearly 97% of the total portfolio is first mortgages. The provision for mortgage losses rose 16% to $13.8 million from a year ago. Also, the $1.06 earnings per share for the calendar year was Atrium’s third-best as a public company.
Because of the strong financial results, the board approved and declared a special dividend on top of the regular dividends for the fifth consecutive year. Furthermore, the monthly dividend payouts are beneficial to TFSA investors. You reinvest dividends 12 times a year, not the usual four.
Generous cash dividends
Firm Capital, through Firm Capital Corporation, provides residential and commercial real estate financing. The $432.4 million MIC focuses on selected niche markets not covered or serviced by large lending institutions. Like Atrium, year-end special dividends are possible depending on financial performance. At $11.77 per share, TFSA investors can partake in the generous monthly cash dividends.
After three quarters in 2024, net income and cash flow from operating activities increased by 1% to $26 million and $37.2 million, respectively. Firm Capital shares its investments with other syndicate partners, including members of the board of directors and senior management. More importantly, Firm Capital hasn’t missed a monthly cash dividend and declared a special year-end top-up dividend yearly since 2013.
Ideal choices
TFSA users enjoy tax-free money growth and have diverse investment options. MICs Atrium and Firm Capital are excellent choices for their dividend payment track records.
