TFSA Passive Income: 2 TSX Dividend Stocks to Consider Now

Building out a passive income portfolio with great TSX dividend stocks is easier than it sounds. Here are 2 stocks to start with.

Key Points
  • A TFSA can generate durable passive income with top TSX dividend picks like Bank of Montreal and RioCan.
  • BMO offers nearly 200 years of uninterrupted dividends, a recent 2.4% hike to a 3.75% yield, and U.S. growth via the Bank of the West deal.
  • RioCan delivers a 6.36% yield from a large, transit-oriented retail/mixed-use portfolio—about $42/month on $8,000—supporting long-term, stable income.

A TFSA packed with stellar TSX dividend stocks can deliver growing, recurring income for years. The market provides plenty of great options to choose from to help make that a reality.

Here are two of those TSX dividend stocks to add to your TFSA portfolio today to start generating that income stream.

diversification is an important part of building a stable portfolio

Source: Getty Images

Pick #1- The big bank stock

It would be impossible to compile a list of TSX dividend stocks that can generate a passive income stream without mentioning one of Canada’s big bank stocks.

That’s because the big banks offer stable, growing revenue streams that are diversified between a stable segment at home and a diversified, growing presence abroad.

Tying that domestic and international growth together is the stellar dividends that the big banks offer.

So then, what big bank should investors consider? That would be Bank of Montreal (TSX: BMO). BMO is the oldest of the big bank stocks. As a result, the bank has been paying out dividends without fail for nearly two centuries.

That’s an incredible amount of time, adding to the bank’s overall appeal and stability. Adding to that appeal is that BMO has provided generous annual upticks to its dividend.

In fact, BMO just announced a 2.4% increase last week. That latest increase brings the yield on that dividend to 3.8%. This means that even a modest investment of $8,000 will generate an income of $300.

That’s not enough to retire on, but it is enough to generate a few shares each year from reinvestments alone.

Turning to growth, BMO is equally impressive.

The bank has taken an aggressive stance on expansion. That includes a solid investment to expand further into the U.S. market, primarily from the Bank of the West acquisition.

That deal expanded BMO’s presence to 32 state markets, including California. It also elevated BMO into position as one of the largest banks operating in the U.S., adding billions in deposits and millions of new customers.

Pick #2 – What about a REIT?

REITs are some of the best long-term options for income-seeking investors. Not only do they offer a solid income-earning potential, but they are backed by defensive revenue streams.

One such REIT that is one of the best TSX dividend stocks to consider is RioCan Real Estate (TSX: REI.UN).

RioCan is one of the largest REITs in Canada. The company offers a diverse portfolio of commercial retail and mixed-use residential properties centred around Canada’s major metro markets.

RioCan’s mixed-use properties in particular offer investors a unique opportunity. The properties are situated along high-traffic transit corridors in Canada’s metro markets.

That puts them in high demand for would-be tenants seeking accommodations with shorter commute times.

More importantly, it offers prospective investors priced out of the market an opportunity to earn real estate income.

As of the time of writing, RioCan offers a distribution yield of 6.4%. Using that same $8,000 example from above, investors can expect to earn an income of just over $42 per month.

That’s enough to generate two shares each month from reinvestments alone.

What are your TSX Dividend stocks?

Both RioCan and BMO have a long history of providing stable payments. This makes them superb options for long-term investors looking for the best TSX dividend stocks to buy and hold.

In my opinion, one or both should be core holdings in any well-diversified portfolio.

Fool contributor Demetris Afxentiou has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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