Canadians are growing more anxious about their financial futures. According to a recent BMO Real Financial Progress Index survey, concerns about the cost of living rose to 78% in April 2025, up 17 points from March. Inflation worries rose by 16 points to 76%, and recession fears climbed to 74%. The message is clear: people are looking for ways to protect their finances and secure a steady income. One place to do that, even with a modest amount, is inside a Tax-Free Savings Account (TFSA). And with $40,000, investors can start building toward a monthly income stream using dividend stocks like South Bow (TSX: SOBO).
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Why South Bow?
South Bow is a relatively new face on the TSX, spun off from TC Energy in late 2024. It owns and operates the Keystone pipeline, which connects Canadian oil production with key U.S. refineries. This isn’t a high-growth, flashy stock. But it doesn’t need to be. South Bow was built to be a pure income-generating asset, and it’s doing just that.
As of writing, South Bow trades at around $36.75 per share and pays a dividend of $2.80 annually. That gives it a yield of 7.5%, which is significantly higher than most other dividend payers on the TSX. If you were to invest $40,000 today, investors could earn almost $3,000 annually or about $250 per month!
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | INVESTMENT TOTAL |
|---|---|---|---|---|---|---|
| SOBO.TO | $36.75 | 1,071 | $2.80 | $2,998.80 | Monthly | $39,359.25 |
More to come
South Bow’s business model supports its generous dividend. It has a high-quality asset in the Keystone pipeline, long-term contracts in place, and very little exposure to volatile commodity prices. In its most recent earnings report, South Bow posted US$498 million in revenue and net income of US$88 million, or US$0.42 per share. Its payout ratio sits at about 77%, which is high but manageable given the nature of its operations. Most of its cash flow is locked in through contracts, which reduces the risk of sudden earnings drops.
The pipeline business isn’t without risk. Political scrutiny around pipeline infrastructure continues, especially in the U.S., and maintenance costs can be significant. But South Bow has already proven it can operate efficiently. It isn’t trying to grow at all costs; it’s trying to be dependable. And that makes it attractive for TFSA investors who care more about cash flow than capital gains.
With more Canadians reporting stress about their finances, jobs, and inflation, investing in something stable like South Bow can be a relief. It may not give you overnight riches, but it offers what many investors are looking for right now: predictability. And when combined with other high-yielding dividend stocks, it could play a key role in helping you hit your income goals faster.
Bottom line
That BMO survey revealed nearly 60% of Canadians are more worried about their personal finances than they were just one month earlier. But even with all the uncertainty, taking small, deliberate steps like investing in a dividend stock like South Bow can make a big difference. It’s not just about the dollars today; it’s about building a better foundation for tomorrow.
