Investing in a TFSA is one of the single best ways for Canadian investors to build a portfolio with massive tax-free potential. And when it comes to investments, there’s no shortage of great options for investors to consider.
Here’s a $7,000 TFSA approach for Canadian investors to consider.
Invest $2000 in a defensive King
Canadian investors are blessed with an abundance of great defensive options to choose from, but there is one that sits alone at the top of the pack.
That leader is Canadian Utilities (TSX:CU) with its 53-year streak of consecutive increases. Canadian Utilities is one of two Dividend Kings in Canada, and Canadian Utilities has the longest uninterrupted streak of dividend increases.
As of the time of writing, the utility stock leader offers a dividend of an impressive 4.3%. This means that even a $2,000 investment to start with will provide dividends of just over $86.
That’s not enough to retire on, but it is enough to generate two shares through reinvestments alone. In other words, it’s a fine foundation to add subsequent investments over the years.
Throw in Canadian Utilities’ stable business model backed by long-term regulated contracts, and you have a superb buy-and-forget option for Canadian investors.
Invest $3000 into an energy infrastructure titan
The next investment in our TFSA is Enbridge (TSX:ENB), with a healthy $3,000 allocation to start with. Enbridge is one of the largest energy infrastructure companies on the planet with a diversified mix of pipelines, renewables, and utility operations.
The pipeline segment generates the bulk of the revenue, while the renewables provide diversified regulated income from sites across North America and Europe. Enbridge’s natural gas utility provides yet another predictable defensive revenue stream.
In other words, Enbridge is a well-diversified option that generates recurring, stable, and growing revenue across multiple segments.
That revenue leaves ample room for the company to pay out a handsome dividend and invest in projects from its multi-billion-dollar backlog.
As of the time of writing, Enbridge offers investors a robust 5.6% yield, making this a top option for Canadian investors.
Like Canadian utilities, Enbridge also has a strong history of providing annual upticks to that dividend, which currently sits at three decades without fail. This means that our $3,000 investment will garner just over $162. That’s enough for a handful of shares through reinvestments.
Drop $2000 into a REIT for monthly income
One final option for Canadian investors to consider is Slate Grocery REIT (TSX:SGR.UN). Slate is a grocery-anchored REIT. The company generates its recurring revenue stream from its portfolio.
That portfolio comprises approximately 110 properties located in metro markets across the U.S. In total, that’s about $2.4 billion in retail space with an occupancy rate well north of 94%.
Those grocery-anchored properties provide a recurring and predictable income, backed by necessity-based defensive businesses. The properties also contain secondary businesses such as restaurants, banks, and doctor offices in addition to those anchor properties.
The end result is a monthly income generator that pays out a handsome distribution of 8%.
Given our final $2,000 investment, that works out to just over $13 each month. Reinvested, that’s an extra share each month, making this a top pick for Canadian investors with longer timelines for that investment to compound.
Canadian investors: Where’s your TFSA?
Finding that mix of income-producing stocks to invest (and reinvest) in your TFSA can make a huge difference over the long term. Looking at the trio of investments mentioned above, here’s how that mix will work during the first year.
| Company | Recent Price | Total Invested | No. of Shares | Dividend | Annual Payout | Frequency |
| Canadian Utilities | $42.20 | $2,000 | 47 | $1.83 | $86.01 | Quarterly |
| Enbridge | $68.48 | $3,000 | 43 | $3.77 | $162.11 | Quarterly |
| Slate Grocery REIT | $10.79 | $2,000 | 185 | $0.86 | $159.10 | Monthly |
| Total income | $7,000 | $407.22 |
One or all of these stocks would do well in any long-term diversified portfolio.
