By The Tax-Free Savings Account (TFSA) is a powerful tool for building wealth when you pair it with quality dividend stocks. All the income you earn in a TFSA is tax-free, so you get to keep all the income you earn.
$30,000 invested smartly in these three stocks could earn about $115 averaged every month. Here’s how you could structure your TFSA.
A solid real estate stock for a TFSA
Many investors look to real estate for passive income. Well, you can do the same on the stock market. Dream Industrial Real Estate Investment Trust (TSX: DIR.UN) owns or manages 348 industrial properties across Canada, the United States, and Europe.
You get to own a stake in a portfolio that would be impossible to accumulate on your own. Dream’s properties are highly attractive for a wide mix of industrial and commercial applications. It has 96% occupancy and long lease terms (over 4 years) that help secure its cash profile.
It has an attractive mid-single digit growth rate supported by a strong rental market. The REIT trades at a massive discount to its private market property value.
Dream yields 5.6% right now. A $10,000 investment in this TFSA stock would earn $45.54 of tax-free monthly income.
A top fintech for regular dividends
If you don’t mind a higher risk stock in your TFSA, Propel Holdings (TSX: PRL) offers a higher reward. Propel provides loans to the sub-prime market, which makes the stock inherently more risky than other dividend plays.
Propel has built some defence in this regard. It uses an artificial intelligence (AI) platform that underwrites its loans. The platform helps Propel quickly adapt its loan portfolio when it senses economic weakness. Likewise, Propel is monetizing the platform by offering lending-as-a-service to other bank offerings.
In the past three years, Propel has grown revenues by a 36% compounded annual growth rate (CAGR) and earnings by a 31% CAGR.
Right now, it yields 4.1%. It has raised its dividend for 12 consecutive quarters in a row! A $10,000 investment would earn $103.02 every quarter or $34.34 averaged monthly.
A top energy infrastructure stock for a TFSA
If you want a strong business with an attractive, growing dividend then Pembina Pipeline (TSX: PPL) is a good bet for a TFSA.
Pembina operates a major integrated transportation and midstream network in Western Canada. In many instances, its network is the only way energy producers get their product to market.
Over 85% of Pembina’s income is contracted on long-term agreements. With high-quality counterparties, Pembina was able to maintain its dividend even when oil prices dipped negative in 2020.
Pembina has a really strong balance sheet that is supporting an attractive capital plan. Right now, it is building an LNG terminal, data centre power plants, an ethane extraction facility, and several pipelines. It believes this will support 5–7% compounded annual growth in the years ahead.
Pembina stock yields 4.3%. It has grown its dividend ever since 2022. A $10,000 TFSA investment would earn $105.84 quarterly or $35.28 averaged monthly.
