Between the capital gains and dividend income, you can use your TFSA as an investment vehicle to grow your wealth. There is no shortage of stocks to choose from when building such a portfolio. Canadian energy stocks have long been a favorite of investors seeking dividend income. The stable companies generate stable and reliable cash flow, supported by diverse income streams and high-quality assets.
Not all Canadian energy stocks may be good investments for income-oriented investors. Today I’ll discuss two solid bets that investors can consider adding to their portfolios for stable and growing cash in their TFSAs.
TC Energy
TC Energy (TSX:TRP) is an energy infrastructure company with a market capitalization of $78.4 billion and power generation and pipeline assets in its portfolio. The pipeline networks of more than 90,000 kilometers transport hydrocarbons throughout North America. The company serves the energy sector through its extensive network and generates stable and strong cash flows.
TC Energy has long been a reliable dividend stock that Canadian investors rely on for passive income. The stock also regularly increases its payouts. TRP stock has increased its dividends at a compound annual growth rate (CAGR) of 7% over the past 25 years. It expects its annual dividends to grow 3% to 5% annually over the long term. At the time of writing, the stock is trading at $75.27 per share and boasts a 4.5% dividend yield that you can lock into your portfolio today.
Canadian natural resources
Canadian natural resources (TSX:CNQ) is one of Canada’s largest producers of crude oil and natural gas. The oil and natural gas company is engaged in the exploration, development, marketing and production of natural gas and crude oil. The oil and gas producer has several long-lived, low-return assets in its diversified portfolio of high-quality assets that allow it to generate strong and stable cash flows.
The company’s solid business model has allowed it to increase payouts to investors for over two decades. Canadian Natural Resources stocks have increased their distributions at an impressive 21% CAGR for the past 25 years in a row. At the time of writing, CNQ stock is trading at $45.44 per share. It pays investors $0.5875 per quarter, which translates into a juicy 5.2% dividend yield that you can lock into your portfolio today.
Silly takeaway
Not every energy company has the disciplined capital allocation that TC Energy and Canadian Natural Resources have. It is their approach to running the businesses that allows the management of these two energy companies to spend a significant portion of their profits on share buybacks and dividends to shareholders. The balance between income and growth can make them attractive investments for income-oriented investors.
Allocating a portion of your TFSA contribution room to hold dividend stocks can help you generate tax-free dividend income for decades.
#TFSA #Investors #Canadian #Energy #Stocks #Add #Portfolio