The Smartest Income Play to Buy With $4,600 Right Now

Dividend stocks like the Toronto-Dominion Bank (TSX:TD) provide passive income.

Andrew Button

Author Bio

Andrew “A.J.” Button is a financial writer with a longstanding interest in value investing and international markets. He began investing at a young age, building a portfolio of dividend stocks to help pay for university. After stepping away from investing for a time, he rediscovered his passion in 2019 when he began working as a freelance financial writer. Since then, Andrew has built a diversified investment approach spanning Canadian, U.S., and international equities, as well as guaranteed investment certificates (GICs) and money market funds. He is particularly interested in international stocks, drawn to their dividend potential and long-term growth opportunities, while maintaining an interest in Canadian businesses. Before joining The Motley Fool, Andrew worked as a freelance copywriter specializing in financial services. He continues to write for financial publications and share his thoughts on stocks through social media.

Education and Professional Credentials

Canadian Securities Course (CSC)
CFA Program Level I examination completed

Areas of Expertise

Value investing, Canadian equities, U.S. stocks, international equities, dividend investing, long-term investing, GICs, money market funds, and portfolio diversification.

Social Media Profiles

Published May 27, 2025 7:00 pm EDT

Are you looking for income plays to buy with, let’s say, $4,600?

If so, Canadian dividend stocks are very much worth looking at.

Canada’s Toronto Stock Exchange is dominated by dividend-paying sectors like banking, energy and utilities. Companies in these industries are among the most stable and reliable out there. Many of Canada’s big banks, in particular, have lasted over 100 years.

With that in mind, here is a Canadian income play I’d buy with $4,600 right now.

Canadian dollars in a magnifying glass — Source: Getty Images

TD Bank

The Toronto-Dominion Bank (TSX: TD) is one of Canada’s best-performing large-cap stocks this year. Up 27% year-to-date, it is trouncing both the TSX and the TSX banking sub-index.

Now, when I say that I “would” buy TD stock, I’m putting my money where my mouth is, because I have bought it. In fact, it’s the largest position in my portfolio; I invested considerably more than $4,600 into it late last year after it crashed, and have made gains on the position since then.

Now, if you’ve been watching TD stock since its lows during last year’s anti-money laundering (AML) scandal, you might wonder why I’d still buy it today. After all, the stock is up over 30% since November 2024; does this party not have to stop sooner or later?

Not necessarily! Although TD stock is up quite a bit since last year when it was truly dirt cheap, it is still comparatively cheap. Additionally, it is performing well, having put out an earnings release just last quarter that widely beat analyst estimates. Speaking of which, let’s take a look at TD’s second quarter earnings release and see what we can learn from it.

Decent growth

TD Bank’s second quarter earnings release was a pretty good one, boasting several metrics that were well ahead of analyst estimates. These included:

$15.1 billion in revenue, up 9.1% (a beat by $1.7 billion).
$6.27 in reported earnings per share (EPS), up 334%.
$1.97 in adjusted EPS, down 3.4%.
A 14.9% common equity tier 1 (CET1) ratio.
A 4.7 leverage ratio.

Overall, it was a good showing. The revenue growth and reported earnings were well ahead of estimates. The small decline in adjusted earnings was a little disappointing, but the company nevertheless saw positive growth in net interest income (NII). Basically, TD grew in the second quarter.

High margins

In addition to having good growth metrics in the second quarter, TD also had respectable profitability metrics. Some highlights included:

Net income margin: 23.9%.
Reported return on equity (ROE): 39%.
Adjusted ROE: 12.3%.
Return on tangible book value: 15%.

These are pretty healthy profitability metrics for any company.

Income potential

Last but not least, we get to TD’s income potential. TD Bank declared a $1.05 dividend last quarter. If this is maintained for the next 12 months, then the yield is 4.5%. That’s enough to get $210 in annual dividends if you invest $4,600 (see math below).

COMPANY	RECENT PRICE	NUMBER OF SHARES	DIVIDEND	TOTAL PAYOUT	FREQUENCY
TD Bank	$92.91	50	$1.05 per quarter ($4.20 per year)	$52.50 per quarter ($210 per year)	Quarterly

Foolish takeaway – passive income stocks

The bottom line on passive income stocks like TD is that they are real, but it takes time to make serious money with them. As the table above shows, you can get about $210 per year back by investing just $4,600 in TD. That might not seem like much, but it will add up over time if you keep investing.