How to Convert $10,000 Into a TFSA Money-Making Engine

Investing in top-quality dividend stocks with high and resilient payouts through a Tax-Free Savings Account (TFSA) can help generate tax-free income. By reinvesting those dividend payments back into your TFSA, you unlock the power of compounding, where your returns start generating their own returns. Over time, this snowball effect can convert your TFSA into a money-making machine.

With this background, here are two TSX stocks that can transform your TFSA into a money-making machine even with a $10,000 investment.

Telus

Shares of communications giant Telus (TSX:T) could be a solid addition to your TFSA to turn it into a money-making machine. Notably, Telus has consistently paid and increased its dividends for years. Moreover, it offers a high and sustainable yield, making it a reliable income stock.

The Canadian telecom leader has an impressive record of rewarding shareholders, having distributed roughly $23 billion in dividends since 2004. Moreover, it has raised its quarterly dividends 27 times since 2011 through a multi-year dividend growth program. Besides its dependable payouts, it currently offers a high dividend yield of 7.7%.

The telco’s diverse revenue streams, low customer churn rate, focus on acquiring margin-accretive customers, and cost-reduction initiatives will likely drive its earnings and dividend payments. Its investments in network infrastructure, from expanding fibre-optic coverage to strengthening 5G capabilities, will likely drive subscriber growth and reduce churn. At the same time, momentum in Telus Health and the expansion of its Internet of Things (IoT) offerings augur well for growth.

Telus plans to increase its dividend by 3–8% annually through 2028. Moreover, the telecom giant has a sustainable payout ratio of 60–75% of free cash flow.

Overall, Telus’s strong dividend payment and growth history, sustainable payout ratio, high yield, and visibility over future distributions make it a compelling long-term addition to a TFSA for consistent income.

SmartCentres REIT

With its monthly payouts, high yield, and durable distributions, SmartCentres REIT (TSX:SRU.UN) could be another solid addition to your TFSA to convert it into a money-making machine. It owns a diversified portfolio of high-quality properties that consistently generates steady net operating income (NOI), supporting its payouts.

SmartCentres’ properties are located at prime intersections with strong foot traffic. These well-placed assets help the real estate investment trust (REIT) maintain high occupancy levels and witness robust leasing demand, which in turn drives rent, supporting cash flow and NOI. Further, its core retail properties and high-quality tenants add stability to its operations in all market conditions.

SmartCentres also has a promising development pipeline, offering considerable room for future growth. The company is expanding into mixed-use developments, combining retail, residential, and commercial spaces to create more diversified and profitable assets. This approach enhances income potential and helps future-proof the portfolio against shifts in the retail landscape.

Furthermore, its vast landbank across major Canadian cities provides it with long-term opportunities to increase funds from operations (FFO), sustain its monthly distributions, and steadily grow its net asset value (NAV). At its current market price, SmartCentres offers a high yield of around 7%.

Earn over $730 per year

Telus and SmartCentres are dependable stocks for converting your TFSA into a money-making engine. By investing $10,000 split evenly between them, you could earn over $730 a year in tax-free income.