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TFSA: How to Invest for $250 Monthly in Retirement

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The TFSA (Tax-Free Savings Account) is the ideal place to build a passive-income portfolio for retirement. All income earned in the account is tax free. Likewise, if you ever need to withdraw funds from the account, there is no tax implication.

By paying no tax on investment income, you can keep as much as 10-15% more of your annual returns. So, the TFSA is definitely a smart place to start building a passive-income stream for retirement. If you were looking to earn $250 per month in retirement, it might not be as challenging as it sounds.

Build up to $60,000 to earn over $250/month in a TFSA

Right now, the TFSA allows for a total contribution of $88,000. That may not be attainable for many Canadian investors immediately. However, say you only start with $30,000. If you contribute $500 to your TFSA every month, you’ll have $60,000 in total in five years.

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There are plenty of quality Canadian dividend stocks yielding around 5% today. If you could collect that yield on $60,000, you could easily earn $265 of monthly passive income. If that sounds appealing, here are three stocks I’d consider for a TFSA retirement portfolio.

An energy stock with a big dividend

Pembina Pipeline (TSX:PPL) earns a 5.88% dividend yield right now. With $20,000, you could buy 456 shares of Pembina Pipeline stock in your TFSA. With the stock paying a $0.6525 dividend every quarter, an investor would earn $297.54 per quarter, or $99.18 averaged month.

While Pembina is considered an energy stock, around 85% of its earnings come from long-term contracts. That means that even if oil prices were to dip, its dividend is backstopped by its contracted assets.

Pembina provides a diverse array of energy infrastructure across Western Canada. Its Cedar LNG project was just approved for construction by provincial regulators, so that could provide a meaningful long-term growth opportunity. For an infrastructure stock, the company has a good balance sheet, so it should be able to fund its growth plans without much shareholder dilution.

A telecom stock at a fair price

Another great TFSA stock for dividends is TELUS (TSX:T). It earns a 5.3% dividend yield today. A $20,000 investment would buy 746 shares in TELUS. With the stock paying $0.35 quarterly, investors would earn $261.10 quarterly, or $87.03 averaged monthly.

TELUS is a leading telecommunications stock in Canada for several reasons. Firstly, it has delivered superior earnings and cash flow growth for the past several years. Second, it has a strong brand, great assets, and market-leading customer growth.

Third, it has innovated into various digital vertical businesses that are supplementing growth. Fourth, the company has a great track record of growing its dividend by around 7% a year. All in all, TELUS is a great income stock for a TFSA. Its valuation is reasonable today.

A solid infrastructure stock for a TFSA

Brookfield Infrastructure Partners (TSX:BIP.UN) is another good TFSA stock trading with a 4.75% dividend yield. You could buy 457 units of BIP stock with $20,000. That investment would earn $238.78 per quarter, or $79.59 averaged monthly.

If you want a stock with a diverse portfolio of defensive assets, this is one to hold. Brookfield owns everything from cell towers to pipelines to ports to utilities. These assets are largely contracted. A good portion of these assets capture growing inflation-indexed earnings.

The company has a solid balance sheet, so recent stock market distress could present some very attractive buying opportunities. This TFSA stock has a good history of growing its divided by around 6-9% annually, so there is some good income upside ahead.

COMPANY RECENT PRICE NUMBER OF SHARES DIVIDEND TOTAL PAYOUT FREQUENCY
Pembina Pipeline 43.83 456 $0.6525 $297.45 Quarterly
TELUS Corp. 26.78 746 $0.35 $261.10 Quarterly
Brookfield Infrastructure Partners 43.76 457 $0.5225 $238.78 Quarterly
Prices as of March 15, 2023

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Warren Buffett’s Berkshire Hathaway mulls major new investment in Canada

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Berkshire Hathaway Chairman and CEO Warren Buffett speaks during an interview with Liz Claman on Fox Business Network’s Countdown to the Closing Bell, on May 7, 2018, in Omaha, Neb.Nati Harnik/The Associated Press

Warren Buffett’s Berkshire Hathaway Inc. BRK-A-N has set its sights on making a major new investment in Canada.

The U.S. conglomerate holding company, whose top shareholder is the 93-year-old billionaire, held its annual meeting on Saturday, live-streamed from a packed arena in Omaha, Neb.

Greg Abel, who is vice-chair of Hathaway’s non-insurance operations, is a Canadian who is widely seen to be Mr. Buffett’s successor in the executive suite and eventually become the company’s chair.

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Members of Berkshire’s leadership team are now mulling options for a new foray into Canada.

“When we see anything that’s suggesting an idea that’s of a size with interest here and meets other requirements, they don’t have any hesitancy about putting big money in Canada,” Mr. Buffett said during the meeting. “There are things we actually can do fairly well, where Canada could benefit from Berkshire’s participation.”

The Oracle of Omaha heaped praise on Canada. “We do not feel uncomfortable in any way, shape or form, putting our money into Canada,” Mr. Buffett said.

“We don’t have any mental blocks about that country. And of course, there’s a lot of countries we don’t understand at all. So Canada, it’s terrific when you’ve got a major economy – not the size of the U.S., but a major economy that you absolutely, you feel confident about operating there.”

Mr. Abel also serves as chair of Berkshire Hathaway Energy, which includes existing Canadian assets.

Assets north of the border include Calgary-based Berkshire Hathaway Energy Canada, which operates 13,000 kilometres of transmission lines and 300 substations in Alberta through AltaLink.

“It goes across many of our operating entities and then, as Warren touched on, all the businesses that we have a piece of that we’re invested in are up in Canada. So the presence is significant,” Mr. Abel said during the meeting. “We’re always looking at making incremental investments there because it’s an environment we’re very comfortable with.”

Mr. Abel recently received the Canadian Business Leader Award in Edmonton from the University of Alberta, where he graduated with a bachelor of commerce in 1984. At the university, he had plans to major in finance but later switched to accounting.

While it has been four decades since he graduated from the Edmonton university, he still visits friends and family regularly in Alberta, and he continues to monitor the Canadian economy.

“I would say the economy moves very closely to the U.S. So the results we’re seeing out of our various businesses that report both the U.S. and Canadian operations aren’t drastically different,” Mr. Abel said. “On the energy side, for example, we make very substantial investments up there in Alberta. But again, it’s very consistent with how that economy is growing.”

He is the nephew of the late Sid Abel, a hockey Hall of Famer who played for the Detroit Red Wings.

 

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Canada-Taiwan investment agreement to boost economic ties – North Shore News

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Last year’s signing of the Foreign Investment Promotion and Protection Agreement (FIPA) is expected to bring Canada and Taiwan closer in economic partnerships, according to experts.

“FIPA is a landmark agreement between Taiwan and Canada,” said Angel Liu, director general of the Taipei Economic and Cultural Office in Vancouver.

“There are some bureaucracies, thresholds or some labour or environmental standards [issues] that, through FIPA, we can facilitate.”

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She was among a host of officials and experts from Taiwan speaking late last month at a World Trade Centre Vancouver event. The conference zeroed in on business opportunities in Taiwan and how Canadian companies can capitalize on investment opportunities there following the signing of FIPA this past December.

FIPA helps provide more relaxed investment procedures for businesses making investments in each other’s territory by streamlining the process or foreign regulations and reducing some burdens on the licensing or reviewing process, according to Liu.

The Taiwan government hopes that FIPA will help attract more investments from Canada and deliver the image of Taiwan as a welcoming market for foreign investors, she added.

“It is just the beginning because it takes time for both sides to digest and to get to know each other more.”

There is “huge space” for growth in trade volume and business partnerships between Canada and Taiwan, especially at a time when both countries are looking to reduce their economic reliance on China, according to Huai-Shing Yen, deputy executive director of the Chung-Hua Institution for Economic Research.

Taiwan was Canada’s 12th-largest trade partner in 2022. Canada’s exports to Taiwan accounted for less than 0.5 per cent of its total exports and Canada’s imports from Taiwan accounted for one per cent.

“This suggests that Taiwan is not yet considered as a main supply source for Canada and the same situation applies the other way around,” said Yen.

She said the bilateral investment between both countries is also “lower than ideal” as Canada accounted for 0.1 per cent of the foreign investment in Taiwan over the past 10 years. And some areas have significant potential for growing trade and partnerships between Taiwan and B.C.

“The first potential is for agricultural products. And the second potential I would say is about the critical mineral supply, because Taiwan has a growing demand of some critical raw materials on which we want to diversify our import suppliers,” she said.

There are about 30 critical raw materials that Taiwan is highly dependent on China, and Canada has great potential to become Taiwan’s new partner in mineral supply, she added.  

Information and Communications Technology (ICT) is another sector Taiwan companies are looking to relocate their investment to countries other than China.

“I understand that Canada wants to develop a strong ICT industry and it’s also an important area B.C. would like to further develop. … We can provide the ICT products and also can be your new source of ICT investments in B.C. as well as in Canada,” said Yen.

Liu said FIPA is a great step further but she also hopes the Canadian government seriously considers Taiwan’s application to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) to unlock more trade and investment opportunities between the two countries.

“[We] encourage CPTPP members, including Canada, to start informal discussion and negotiations with Taiwan, so we can at least start the negotiation informally.”

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Avoid These 2 Stocks in 2024, But Consider Investing in This 1 Instead!

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Utility stocks are supposed to be safety nets or defensive assets, but not when interest rates are sky-high. Thus far, the sector is one of three worst performers in 2024. TransAlta (TSX: TA) and Boralex (TSX:BLX), in particular, own renewable energy assets and pay decent dividends yet continue to underperform.

Avoid both dividend stocks and instead consider investing in Secure Energy Services (TSX:SES) in the industrial sector, the third best performing sector. In addition to the market-beating return (+22.1%), the yield is more attractive, and the payout is safe.

Evolving markets

TransAlta’s earnings attributable to shareholders in Q1 2024 beat expectations, although it declined 24.5% to $222 million compared to Q1 2023. Furthermore, free cash flow (FCF) and cash flow from operating activities fell 21.7% and 47.2% year over year respectively to $206 million and $244 million.

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The $3 billion company operates electrical power generation assets in Canada, the United States, and Australia. It provides clean and reliable power to municipalities, medium and large industries, businesses, and utility customers. TransAlta is one of Canada’s largest wind power producers and Alberta’s largest hydroelectric power producer.

Since green development is on hold in Alberta, management will focus on other core jurisdictions, such as the U.S. and Western Australia, to secure risk-adjusted returns within stable markets. At $9.84 per share (-10.1% year to date), the dividend offer is 2.44%.

Robust pipeline

As of this writing, Boralex investors are down 10.7% year to date but partake in the 2.21% dividend. The share price of $29.92 is higher than TransAlta and Secure Energy Services. This $3.1 billion power company develops wind, solar, and hydroelectric energy production facilities and owns energy storage sites in Canada, France, the U.K., and the U.S.

In 2023, net earnings soared 1,337.5% to $115 million versus 2022 due to strong wind farm performance and asset commissioning in France. Discretionary cash flows increased 7.2% year over year to a record $179 million. Still, the record results don’t show on the stock’s performance. The trailing one-year price return is -22.3%.

Patrick Decostre, President and CEO of Boralex, said two major projects are ongoing, with commissioning in Q4 2024. Two secured-stage projects are progressing according to plan. The company submitted bids (solar and storage) in New York. “We can successfully complete these various projects, which are spread over the next several years,” he said.

Strong industry fundamentals

Secure is in ann environmental and energy infrastructure business that operates in the waste management industry. The network of this $3 billion company extends throughout Western Canada and North Dakota. 2024 could be a banner year, given the impressive first-quarter results.

In the three months ended March 31, 2024, revenue declined 13% year over year to $360 million, while net income climbed 667.3% to $422 million compared to Q1 2023. Secure sold 29 facilities to Waste Connections for $1.2 billion on orders by the Competition Tribunal.

Management said Secure is extremely well positioned for success due to strong industry fundamentals and growth opportunities. The expanded Trans Mountain pipeline will soon begin operations. Furthermore, the waste processing facilities currently only operate at about 60%.

More than secure

Secure Energy is a winning investment, evidenced by the 188% return in 3 years. At $11.41 per share, the 3.51% dividend yield is safe owing to the low 20.6% payout ratio.

 

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