The government created the TFSA in 2009 to provide Canadians with an additional savings tool in addition to the RRSP. Since its inception, the cumulative TFSA contribution limit has increased to $ 75,500 in 2021. This is large enough to build a passive income portfolio that can generate stable, tax-free cash flow on hard savings. won.
The TFSA offers great flexibility. Investors can withdraw funds at any time to cover emergencies and the total value of all cash withdrawn is added to the contribution room available in the following calendar year. Investment income is not taxed and retirees don’t have to worry about interest or dividends added to their global net income calculation which determines OAS clawbacks.
The best stocks to hold tend to pay attractive and secure dividends that should continue to grow at a strong pace. Let’s take a look at Telus (TSX:T)(NYSE:TU), TD Bank (TSX:TD)(NYSE:TD), et Enbridge (TSX: ENB) (NYSE: ENB) to see why they might be great choices today for starting a TFSA income fund.
Telus is a leading player in the Canadian communications industry with wireless and wireline networks that provide customers with mobile, Internet and television services. The company is expanding its fiber optic and 5G networks to ensure it continues to meet the demands of its subscribers.
New income opportunities exist in home surveillance and security services. Telus also has a growing healthcare division that provides digital solutions to help doctors, hospitals and insurance companies operate more efficiently. The group’s products have really shown their value over the past year, and there is great potential for revenue growth at Telus Health.
Telus has an excellent record when it comes to increasing the dividend. At the time of writing, the stock is offering a return of 4.5%.
TD is Canada’s second-largest bank in terms of market capitalization. The company is best known for its retail operations in Canada, but TD also has a strong presence in the United States. The US company is expected to benefit from the post-pandemic economic rebound, as massive stimulus efforts boost the recovery.
TD currently has a significant cash surplus. Funds were set aside last year to cover a possible wave of defaults. Government assistance to homeowners and businesses has averted the worst-case scenario, and investors should reap the rewards when banks are allowed to resume dividend hikes and share buybacks.
Investors who buy TD shares can now earn a dividend yield of 3.7%.
Enbridge is a key player in the North American energy infrastructure industry. The company transports 25% of all oil produced in the United States and Canada and displaces 20% of the natural gas used in the United States. Enbridge also has a growing renewable energy division with wind, solar and geothermal assets.
Most of the company’s revenue comes from regulated businesses and Enbridge has an extensive capital program underway that will continue to support distributable cash flow growth of 5-7% per year. Enbridge’s stock price appears to be undervalued at current levels and offers a strong dividend yield of 6.8%.
The net income on TFSA income shares
Telus, TD and Enbridge are all high quality companies with attractive dividends that are expected to continue to grow. An equal investment in all three stocks would provide an average return of 5% per year. This would generate tax-free annual income of $ 3,775 on a TFSA portfolio of $ 75,500.
That’s over $ 300 per month!
The Motley Fool owns shares and recommends Enbridge. The Motley Fool recommends TELUS CORPORATION. Foolish contributor Andrew Walker owns shares of Telus, TD Bank and Enbridge.