For investors who just started contributing to their TFSA (Tax-Free Savings Account) last year and have kept up with it in 2026, one might be looking at $14,000 that’s just sitting in savings, waiting for a better place to be put to work.
Undoubtedly, broader markets wobbled quite a bit through mid-October, especially south of the border. And while the TSX Index looks like the high-value haven as the AI trade takes a turn for the worse and rate jitters intensify, questions linger as to what the next move will be after a rather anxious start to the fourth quarter.
Could things have the potential to get scarier for investors going into Halloween? Possibly.
Either way, I think Canadian value plays and defensive dividend payers could be the way to go as investors look to throw in the towel on the high-flying AI names, which did seem long overdue for a correction.
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Volatility is getting choppy – That’s an opportunity for passive income seekers
Whether this AI hype-to-value rotation is just the start remains anyone’s guess. Either way, with tensions in the Middle East paving the way for higher oil prices again, it’s clear that the Canadian market might have what it takes to finish 2026 with strength after a brief breather through the latter summer months.
So, what’s a new investor to do with two years’ worth of TFSA contributions (a sum of $14,000) as volatility takes things up a notch?
Indeed, a cautious investor, especially one who’s not seasoned at taking on risk in equities, might think that waiting things out could be the smartest move.
Why jump into the waters when it’s rough and other swimmers fear a hurricane on the horizon? While it isn’t the sleep-easiest time to start investing in this market as the S&P 500 really starts to test the stomachs of investors, I think now is as good a time as any to put new money to work, especially TFSA cash.
BMO Equal Weight REITs Index ETF
For those seeking monthly cash flow, I think going for a REIT or ETF (or maybe even a REIT ETF) could make the most sense, especially since there’s no shortage of monthly payers with big, fat distributions. Consider shares of the BMO Equal Weight REITs Index ETF (TSX: ZRE) for a 4.7% yield and exposure to a broad basket of Canadian REITs that have recently fallen under serious pressure amid fears of higher rates.
Shares are down around 11% from their summer highs, and if the Bank of Canada hikes fewer times than expected in the coming year, perhaps a bounce could be in the cards for some of the underrated cash cows.
Cardinal Energy
As for a great dividend stock, Cardinal Energy (TSX: CJ), a mid-cap $2.4 billion energy firm, pays its dividend monthly. With an annual yield of 5.4% and shares hovering at around their all-time highs, I consider the name to be nothing short of intriguing, especially as the firm looks to keep jolting cash flows while chipping away at the debt load.
While the name tends to be quite sensitive to oil price fluctuations, as is the case for most smaller producers, I do think that there’s a lot to look forward to as the firm looks to reap the rewards of recent expansion efforts.
In my view, Cardinal is one of the more underrated monthly dividend payers, and one that stands to benefit in a climate where Middle East tensions could result in a “higher for longer” energy environment.
You don’t need to wait for “calmer” markets – volatility and the shift away from pricey AI names may be a good time to start putting money to work in Canadian value and dividends.
