Invest $7,000 in This TSX Dividend Stock for $122.36 in Passive Income

This dividend stock offers up incredible passive income for investors, and not just through dividends.

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When it comes to earning a little extra income from your investments, few things feel better than seeing money appear in your account each quarter without lifting a finger. That’s the beauty of dividend stocks, especially when held in a Tax-Free Savings Account (TFSA). With no tax on gains or income, every dollar you earn stays right where it belongs. One dividend stock in particular that deserves attention right now is Intact Financial (TSX:IFC). For Canadians with $7,000 to put to work, this is a name worth looking at.

The stock

Let’s start with what Intact Financial actually does. Based in Toronto, it’s the largest provider of property and casualty insurance in Canada. It offers home, auto, and business insurance, serving millions of customers across the country. Over the years, it has expanded its reach into the U.S. and Europe, thanks to acquisitions like RSA’s Canadian and U.K. businesses.

As of early May 2025, Intact Financial is trading at around $300. That might seem a bit pricey at first glance, but it’s important to look at what you get in return. The company pays an annual dividend of $5.32 per share, which works out to a yield of about 1.72%. The dividend has grown steadily year after year, backed by rising earnings and a disciplined approach to managing risk. So, let’s look at how much $7,000 could get you.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDTOTAL PAYOUTFREQUENCYTOTAL INVESTMENT
Intact Financial (TSX:IFC)$30023$5.32$122.36Quarterly$6,900

More to come

But there’s more to this stock than just dividends. Intact has a strong track record of growth. In its most recent earnings release, the passive-income stock reported net income of $667 million for 2024, a 27% increase over the prior year. That kind of growth gives it room to continue raising its dividend while also reinvesting in new opportunities. In fact, this is a company that’s been very strategic about acquisitions, expanding its footprint in markets that complement its Canadian foundation.

It also helps that insurance is a naturally defensive sector. People pay their premiums no matter what the market is doing, which makes earnings more predictable. That’s one reason Intact’s payout ratio stays conservative, usually in the 35–45% range, meaning the dividend is well-covered by earnings. It doesn’t overextend just to keep shareholders happy in the short term. That sort of fiscal prudence is a good sign for long-term investors.

Another point worth noting is how Intact compares to peers. Some insurers focus only on life insurance or just auto coverage, but Intact has diversified exposure to all kinds of insurance products. That allows it to weather storms in one area by leaning on strength in another. During periods of higher claims, like after a major natural disaster, it can absorb those shocks better than smaller, more focused players.

Bottom line

For Canadians, owning a dividend-paying insurance company like this inside a TFSA is especially smart. Every dividend you earn gets to stay in your account, untouched by taxes. And if the passive-income stock continues to raise its dividend each year, as Intact has done consistently for more than a decade, you’ll benefit from rising income without any extra effort.

So, while $7,000 might not seem like much in the grand scheme of retirement planning, it can be a meaningful step in building a reliable income stream. Intact Financial gives you exposure to a resilient sector, a growing business, and a dependable dividend. If you’re looking to put your TFSA to work, this could be a great place to start. After all, passive income doesn’t have to mean risky bets or flashy yields. Sometimes, boring is brilliant.

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 recommends Intact Financial. The Motley Fool has a disclosure policy.

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