How to Convert $25,000 in TFSA Savings Into Reliable Cash Flow

My list of three TFSA stocks includes Telus, and it should translate into reliable dividend income for your cash flow needs.

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Key Points
  • • A $25,000 TFSA investment can generate approximately $780 in annual tax-free dividend income by diversifying across three quality Canadian dividend stocks.
  • • The recommended portfolio includes Fortis (3.31% yield) for stability with its 52-year dividend growth record, TD Bank (2.8% yield) for reliable banking income, and Telus (9.65% yield) for higher income potential.
  • • Investors can adjust the weighting between these stocks to customize their risk/reward profile while maintaining a steady stream of predictable cash flow from regulated utilities, banking, and telecommunications sectors.

Generating a stream of predictable and reliable cash flow is a desirable goal that many of us have. It’s also a very achievable goal. Stocks, bonds, and real estate can all play a part in achieving this goal. The key is to direct your TFSA savings into the right asset, taking into account the risks and potential rewards.

Let’s take a look at how you can take $25,000 of your TFSA savings and use that to generate a reliable annual cash flow stream of $780 by investing in a few high-quality stocks.

Piggy bank with word TFSA for tax-free savings accounts.

Source: Getty Images

Fortis

The first stock I would recommend buying with your TFSA savings is Fortis Inc. (TSX: FTS). It’s a pretty straightforward pick that benefits significantly as a utility stock receiving revenues that are 100% regulated. This means that the risk here is very small and that the dividends are extremely dependable.

Fortis stock’s 52-year record of annual dividend increases speaks to this fact. The reliability of this dividend stock’s cash flows is unbeatable. Fortis stock is currently yielding 3.3%

TD Bank

Toronto-Dominion Bank (TSX: TD) is one of Canada’s largest banks, with the greatest scale and U.S. presence. TD Bank stock is trading at all-time highs and currently yielding 2.8%. It’s not that high, but it’s pretty reliable and that counts for a lot.

In TD Bank’s latest quarter, the second quarter of fiscal 2026, earnings per share (EPS) of $2.38 were 21% higher than the same period last year and better than expected. This was driven by a continued strong Canadian banking environment and net income. The bank remains well capitalized as it raised its quarterly dividend by 4%.

Telus

To balance out my list here, I’m including Telus Corp. (TSX: T). It does have less visibility and predictability at this time because the company is struggling with a difficult telecom environment, but it also has a lot of strengths that balance this out.

For example, Telus stock’s dividend yield is currently at 9.7%. This yield is backed by Telus’ strong cash flow growth profile, moderating revenue per customer decline and positive performance from businesses like Telus Health, which is targeting earnings before interest, taxes, depreciation, and amortization (EBITDA) of more than $400 million in 2026. Telus continues to look for strategic investors to accelerate growth in Telus Health.

Telus stock’s dividend is increasingly well-covered by its cash flow, but many investors remain worried. In the first quarter, Telus generated cash flow from operations of $1.1 billion and free cash flow of $583 million, which was 19% higher than a year ago.

Telus is forecasting revenue and adjusted EBITDA growth of 2% to 4% in 2026, along with 10% growth in free cash flow to $2.45 billion.

The bottom line

As you can see from the table below, a $25,000 investment in these three stocks could generate approximately $780 in annual dividend income. You can adjust the weighting in each of these stocks as you see fit in order to change the income and risk/reward levels that you are looking for.

Fool contributor Karen Thomas has positions in TELUS and Toronto-Dominion Bank. The Motley Fool recommends Fortis and TELUS. The Motley Fool has a disclosure policy.

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