In today’s uncertain economic environment, building a reliable source of passive income has become increasingly important. Regular dividend income can provide financial stability, help preserve purchasing power during periods of persistent inflation, and, when reinvested, accelerate long-term wealth creation through compounding.
With that in mind, here are two high-quality dividend stocks that can generate approximately $850 in annual passive income from a combined investment of $10,000, with the capital split equally among the two. Importantly, investors can make these investments through their Tax-Free Savings Account (TFSA) to earn tax-free returns, including dividend payouts and capital gains.
Meanwhile, let’s take a closer look at each of these stocks.
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Telus
Despite the challenging environment facing the telecommunications sector, I remain bullish on Telus (TSX:T) due to its exceptionally high forward dividend yield of 11.8% and attractive long-term growth prospects. The continued adoption of automation, remote work and learning, artificial intelligence, and e-commerce is expanding the demand for reliable connectivity, creating a growing addressable market for telcos.
To capitalize on these trends, Telus plans to invest $66 billion in expanding its 5G and broadband infrastructure across Canada through the end of the decade. These investments should support customer growth, increase average revenue per user (ARPU), and strengthen long-term cash flow generation. In addition, management expects revenue from its AI-enabled products and services to grow at an annualized rate of approximately 30% through 2028, reaching $2 billion.
At the same time, Telus continues to strengthen its balance sheet. The company reduced its net debt-to-EBITDA (earnings before interest, taxes, depreciation, and amortization) ratio to 3.5 times at the end of the first quarter, from 3.9 times a year earlier, and expects to reduce it to 3.3 times by year-end. Supported by its long-term growth initiatives, improving financial position, and exceptionally high dividend yield, Telus appears well positioned to reward income-seeking investors over the long run.
CT Real Estate Investment Trust
Second on my list is CT Real Estate Investment Trust (TSX:CRT.UN), a high-quality REIT that owns 378 predominantly retail properties comprising approximately 31.8 million square feet of gross leasable area. The REIT benefits from a highly stable tenant base, with Canadian Tire occupying roughly 29.2 million square feet, or 92.1% of its portfolio. As a result, CT REIT maintained an impressive 99.4% occupancy rate at the end of the first quarter, supporting resilient rental income.
The REIT also operates with an efficient cost structure, with general and administrative expenses accounting for just 2.5% of total revenue. This operational efficiency supports strong profitability and consistent cash flow generation, enabling CT REIT to reward unitholders with reliable monthly distributions. The stock currently offers an attractive forward dividend yield of approximately 5.3%.
Looking ahead, CT REIT is well positioned to benefit from favourable industry fundamentals. Strong demand for retail space, combined with limited new supply due to elevated construction costs, continues to support occupancy levels and rental growth across the Canadian retail market. At the same time, the REIT is expanding its portfolio through approximately 629,000 square feet of development projects currently under construction, representing nearly $380 million in investments. These projects should drive long-term earnings growth and further strengthen the sustainability of its monthly distributions, making CT REIT an attractive option for income-focused investors.
