One way to start a cheap passive income flow is by investing in dividend shares with a growing payment. In addition to consistent dividend income, investors are also ready to take advantage of capital gains.
In addition, if held in a TFSA (tax-free savings account), both dividend income and capital profits are exempt from Canada Revenue Agency taxes. So let’s see how to structure $ 14,000 for a consistent TFSA income in 2025.
Is this TSX dividend share a good purchase?
Valued on a market capitalization of $ 580 million, Diversified Royalty (TSX: DIV) is busy taking over royalties from multi-location companies and franchisors in North America. The company owns the Sutton, Mr. Lube + Tyres, Air Miles, Mr. Mikes, Nurse Next Door, Oxford Learning Centers, Stratus Building Solutions and Barburrito trademarks.
Diversified Royalty Corp. Generates income through royalty payments from its royalty partners, based on a percentage of their system sales or a fixed payment. This enabled the company to distribute most of its cash flow to shareholders through dividends.
In 2025 it is predicted that diversified royalty shareholders will pay an annual dividend of $ 0.26 per share, indicating a forward return of 7.6%. In addition, analysts predict his free cash flow to expand from $ 46.4 million in 2024 to $ 63 million in 2028.
Given the outstanding number of shares, the annual dividend costs of Diversified Royalty are around $ 44 million, which indicates a payment ratio of almost 90%. A growing free cash flow should help diversified royalties to increase its dividends in the future.
Diversified Royalty uses four important competitive benefits that include the following:
- Safe benefits that cost costs per unit as the royalty portfolio grows.
- Oppositioning by focusing established brands on immediate capital of royalty income.
- High switch costs that are locked in partners after first transactions.
- Network effects where reputation attracts more deal stream. Growth drivers include the revenue growth of the same store of existing partners, new acquisitions of royalty stream, partner expansion and sector diversification.
Important risks, however, are dependence on partner performance, economic sensitivity that affects companies with consumers, competitive pressure on partners, interest rate coil on credit facilities and dependence on the quality of partner management for sustainable royalty payments.
A TOP TSX stock for your TFSA
Another TSX shares that you offer a tasty dividend revenue is Mullen Group (TSX: MTL). Mullen Group is appreciated on a market capitalization of $ 1.2 billion and is a Canadian transport and logistics company.
MTL is expected to pay shareholders an annual dividend of $ 0.84 in 2025, which indicates a revenue of more than 6%. These payouts are expected to rise to $ 0.92 per share in 2027.
In the second quarter of 2025, Mullen Group reported a turnover of $ 540 million, an increase of 9% year after year, despite a slow macro environment, which shows the effectiveness of the contracy -off strategy.
The acquisition of Cole Group contributed $ 52.6 million to incremental turnover during only one month of property, while the turnover of the same stores remained relatively flat at $ 440.8 million. Management emphasized its strategy to pursue acquisitions during economic decline when opportunities arise in attractive valuations.
The company successfully concluded a bond offer of $ 400 million in July, with more than $ 100 million in available cash for future growth, while the duration of the debt is extended to 12 years. This positions Mullen for continuous acquisitions and removes the refinance risk in the short term.
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