My $14,000 TFSA Plan for $150 in Quarterly Tax-Free Income

Given their well-established businesses, resilient cash flows, and healthy long-term growth prospects, these two Canadian dividend stocks are well positioned to generate reliable passive income, making them excellent additions to an income-focused portfolio.

| More on:
Key Points
  • Bank of Nova Scotia and Enbridge offer strong opportunities for generating robust quarterly dividend income, with forward yields of approximately 3.7% and 4.88%, respectively, supported by resilient business models and strategic growth initiatives.
  • Both companies provide investors with reliable income and potential for capital appreciation, making them ideal choices for a TFSA to enhance long-term returns through tax-free dividends and reinvestment, particularly during volatile market conditions.

The Canadian equity markets have become more volatile amid ongoing geopolitical tensions in the Middle East, persistent inflation, and rising oil prices. In this uncertain environment, investors should focus on high-quality dividend stocks with well-established businesses and resilient cash flows. Such companies can help strengthen a portfolio while providing a stable and reliable stream of passive income.

These consistent dividend payments can enhance financial stability and help preserve purchasing power during periods of elevated inflation. Moreover, reinvesting dividends can accelerate wealth creation through compounding, helping investors achieve their long-term financial goals sooner.

COMPANYRECENT PRICENUMBER OF SHARESINVESTMENTDIVIDENDTOTAL PAYOUTFREQUENCY
BNS$121.8857$6,947.16$1.14$64.98Quarterly
ENB$79.4388$6,989.84$0.97$85.36Quarterly
Total$150.34Quarterly

With that in mind, a $14,000 investment split equally between the following two Canadian dividend stocks can generate approximately $150 in quarterly dividend income. Moreover, investors can make these investments through their Tax-Free Savings Accounts (TFSA) to earn tax-free returns, including dividends and potential capital appreciation. Let’s take a closer look at these two Canadian stocks.

diversification and asset allocation are crucial investing concepts

Source: Getty Images

Bank of Nova Scotia

Bank of Nova Scotia (TSX: BNS) is an excellent dividend stock for income-seeking investors, backed by its diversified revenue streams, resilient cash flows, and long history of dividend payments. The bank operates across multiple countries and offers a broad range of financial services, generating stable earnings from well-diversified sources regardless of the macroeconomic environment. This resilient business model has enabled Scotiabank to pay dividends consistently since 1833. With a quarterly dividend of $1.14 per share, the stock currently offers an attractive forward yield of approximately 3.7%.

Meanwhile, Scotiabank is strategically repositioning its business by expanding its higher-return North American operations while reducing its exposure to lower-growth, less-profitable Latin American markets. To support this strategy, the bank is working to acquire MapleMark Bank and the remaining shareholdings of Scotia Group Jamaica Limited (SGJL) that it does not currently own. The MapleMark acquisition could strengthen Scotiabank’s presence in the fast-growing Dallas market, while the SGJL transaction should improve capital allocation and enhance operational efficiency across its Caribbean operations.

In addition, a relatively elevated interest-rate environment should continue to support the bank’s core lending business. Scotiabank has also launched a share repurchase program that could reduce its outstanding share count by approximately 1.2%, increasing earnings per share and enhancing shareholder value. Supported by its diversified business model, dependable dividend track record, and strategic growth initiatives, Scotiabank remains an attractive choice for income-focused investors.

Enbridge

Another dividend stock I believe is a compelling choice for income-seeking investors is Enbridge (TSX: ENB). The energy infrastructure giant operates a highly diversified business that includes crude oil and natural gas pipelines, natural gas utilities, and renewable power assets. Approximately 98% of its earnings come from regulated assets and long-term contracts, while nearly 80% is protected by inflation-indexed mechanisms. This resilient business model enables Enbridge to generate stable and predictable cash flows regardless of commodity price fluctuations or broader economic conditions.

Backed by these dependable cash flows, Enbridge has paid dividends for more than 70 years and increased its dividend for 31 consecutive years. The stock currently offers an attractive forward dividend yield of approximately 4.9%.

Looking ahead, Enbridge is advancing its $40 billion secured capital program to expand its asset base and meet growing demand for energy infrastructure across North America. Supported by these investments, management expects adjusted earnings per share and distributable cash flow per share to grow at an annualized rate of around 5% over the coming years. Reflecting confidence in its long-term growth prospects, management plans to return $40–$45 billion to shareholders through dividends and share repurchases over the next five years. Combined with its resilient business model, attractive yield, and visible growth pipeline, Enbridge is an excellent choice for income-seeking investors.

Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned. The Motley Fool recommends Bank of Nova Scotia and Enbridge. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Start line on the highway
Dividend Stocks

Canada Has $500 Billion of Major Projects in the Pipeline: Here’s the Stock I’d Buy

Canada’s plan to speed up approvals for mega-projects could make WSP a key winner long before construction even starts.

Read more »

Concept of multiple streams of income
Dividend Stocks

This 4.1% Dividend Stock Is Such an Easy Passive Income Play

A 4.1% yield might not turn heads, but TC Energy's growing natural gas network makes this dividend stock an easy…

Read more »

Canadian Red maple leaves seamless wallpaper pattern
Dividend Stocks

The Companies Quietly Rewarding Canadian Shareholders While No One’s Watching

Some of Canada's steadiest dividend growers never make the headlines. Here are two TSX stocks quietly putting more cash in…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

TSX Dividend Stocks That Keep Paying No Matter What the Market Does

These stocks have steadily increased their dividends for decades.

Read more »

Couple working on laptops at home and fist bumping
Dividend Stocks

This Canadian Stock Could Replace Your Side Hustle

Are you looking to replace your side hustle with some passive monthly income? This Canadian stock provides an ideal mix…

Read more »

electrical cord plugs into wall socket for more energy
Dividend Stocks

A Canadian Dividend Stock to Hold for Decades

This company has increased its dividend annually for more than 50 years.

Read more »

Income and growth financial chart
Dividend Stocks

3 TSX Blue-Chip Stocks to Buy With $10,000 Now

These TSX blue-chip stocks have a history of paying reliable dividends while continuing to grow their businesses over the long…

Read more »

Canadian Dollars bills
Dividend Stocks

Want Monthly Cash Flow? This 10.6% Dividend Stock Delivers

A 10.6% yield and monthly distributions sound appealing, but investors should understand how HDIF generates that income before buying.

Read more »