Have Room in Your TFSA? 1 Canadian Dividend Champion for April Investors

If you’ve got extra cash in your TFSA, the latest dip in markets may provide you with a golden opportunity to snag a few shares of high-quality dividend payers at reasonable prices.

If you’ve got extra cash in your TFSA (Tax-Free Savings Account), the latest dip in markets may provide you with a golden opportunity to snag a few shares of high-quality dividend payers at reasonable prices.

Indeed, the TSX Index has been really quick to bounce back from the brutal spring season of selling. And while it’s tough to predict the market’s reaction as the next chapter of Trump’s tariffs (or trade deals) is revealed, I still think that younger, long-term investors should stay the course and stick with equities if they’re in it for the next eight to 10 years.

At the end of the day, the stock market is one of the greatest wealth creators for those looking to build a nest egg. Of course, you’re going to need the time horizon and the patience to stay standing as wave after wave of volatility hits you.

Blocks conceptualizing Canada's Tax Free Savings Account

Source: Getty Images

Staying invested amid a trade war

Though it can be tough to sail through a bear market, it’s these tough down markets that investors will need to ride out en route to the next bull run. It’s this volatility that acts as the price one must pay to get better results over the extremely long haul.

Of course, it remains to be seen whether the stock market’s 52-week lows will be revisited. While Trump has shown a willingness to make a deal that doesn’t involve hefty tariffs, it remains to be seen whether Xi and Trump will have the productive phone call that every hopeful investor is eagerly awaiting.

In any case, here is one name that will pay you to wait, regardless of what the market does in May. So, before you sell in May and go away, perhaps it’s time to make the contrarian move by buying the dip and investing in Canada.

Canadian Tire

Don’t look now, but shares of Canadian retailer Canadian Tire (TSX: CTC.A) are now yielding just shy of 5%. Indeed, the stock has been a huge underperformer since peaking in the first half of 2021. Now down around 29% from its high, the shares of the more than 100-year-old retailer are in a painful multi-year bear market, and it’s unclear how or when the company will return to its soaring ways.

As the firm sells off non-core assets to prioritize investing in growth in today’s less certain climate, I like the stock’s chances of turning a corner from here.

On the one hand, a tariff-fueled recession means less money in consumers’ pockets and perhaps higher prices on certain goods. On the other hand, perhaps more Canadians will choose to do business with Canadian Tire if it means having a greater selection of Canadian goods and doing business with a firm that’s Canadian right down to its core.

Could the potential positives from a tariff-related shift in consumer sentiment offset some of the negatives? Time will tell. Either way, there may be no avoiding the initial pain if tariffs remain in place through late summer. In any case, I wouldn’t ignore the “buy Canadian” effect I highlighted in a prior piece, which may work out in Canadian Tire’s favour.

All considered, I view Canadian Tire stock as a potential winner as Canadian consumers aim to spend more on Canadian brands and less on U.S. retailers. The stock also appears to be a solid value with its single-digit trailing price-to-earnings (P/E) ratio.

Fool contributor Joey Frenette has no position in any of the stocks mentioned.

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