The Tax-Free Savings Account (TFSA) is one of the best vehicles for creating long-term passive income. In fact, I would argue it’s the best. You can put in over $100,000 if you were eligible back in 2009, and $7,000 is added each and every year. From there, you can withdraw at any time, topping up when contributions come out in January of each new year. But, where to invest? Let’s look at three solid options that could create immense passive income for investors.
RSI
Rogers Sugar (TSX:RSI) is a company built on consistency, producing a product Canadians use every day, operating in a stable industry, and paying out a dividend that’s been reliable for decades. The company operates under a simple, durable business model: refining and distributing sugar and sweeteners across Canada.
One of the most appealing features for income investors is the dividend yield, which currently sits around 5.8% at writing. The company pays $0.64 annually, and unlike speculative high-yield plays, Rogers Sugar’s dividend comes from steady cash flow and a manageable payout ratio, currently at 73%. That means the dividend is sustainable, not stretched, and the company has room to keep rewarding shareholders over time.
Rogers Sugar’s latest earnings also show how resilient the business remains even in tougher conditions. During its third quarter earnings, it reported $313 million in revenue, up year over year thanks to both higher pricing and increased sales volumes. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) also improved, reflecting better operational efficiency at its three major refineries in Vancouver, Taber, and Montréal. All together, it’s a defensive company allowing investors to look forward to stable passive income.
CCA
Cogeco Communications (TSX:CCA) is the kind of steady, income-generating stock that fits perfectly in a TFSA built for passive income. Cogeco operates as a telecommunications and media company, providing broadband internet, TV, and phone services to residential and business customers in Canada and the United States. It benefits from stable subscription revenue, long-term contracts, and low customer churn, making its cash flow highly predictable. That consistency is what underpins its strong dividend track record.
Currently, Cogeco offers a dividend yield around 6%, paying $$3.95 per share annually. With a payout ratio of 48%, it’s at a comfortable level that leaves plenty of room for reinvestment and future growth. Cogeco has increased its dividend for 19 consecutive years, a streak that shows just how reliable its management and business model are.
Financially, Cogeco remains in solid shape despite industry competition. In its most recent quarterly report, the company posted revenue of $709 million, with earnings per share (EPS) rising to $2.09, beating estimates. In fact, management also announced a 7% dividend increase to $0.87 quarterly per share.
WN
George Weston Limited (TSX:WN) is a diversified holding company that owns controlling stakes in Loblaw Companies and Choice Properties REIT. Together, these two holdings form the backbone of Weston’s earnings, providing exposure to grocery, retail, and real estate.
That reliable cash flow translates directly into predictable dividends. George Weston currently offers a dividend yield of around 4.2%, paying $3.58 per share annually. Weston has increased its dividend every year for more than a decade, supported by steady earnings from Loblaw and rental income from Choice Properties. The company’s payout ratio remains comfortably under 45%, leaving plenty of room for future increases.
Financially, Weston is in excellent shape. In its most recent quarter, the company reported revenue of $14.8 billion, up 5% from the prior year, and adjusted net earnings of $401 million, supported by continued strength at Loblaw. Its retail operations have been buoyed by stable food demand and strong performance from Shoppers Drug Mart, while Choice Properties continues to deliver reliable rental income and development growth.
Bottom line
Together, these three dividend stocks offer immense passive income. In fact, here’s how much a $7,000 investment in each could bring in each year.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| WN | $86.16 | 81 | $3.58 | $290.00 | Quarterly | $6,981 |
| CCA | $64.37 | 108 | $3.95 | $426.60 | Quarterly | $6,949 |
| RSI | $6.17 | 1,134 | $0.36 | $408.24 | Quarterly | $6,996 |
That’s a total of $1,124.84 each year in passive income! Without lifting a finger beyond the “buy” button.
