The TFSA (Tax-Free Savings Account) is a great place to invest for passive income. When you earn dividends, interest, and capital gains in the TFSA, you aren’t required to report the income or pay any tax on the income.
Preserve and grow your income by using your TFSA
By simply investing in the TFSA, you can earn up to 20% more income (depending on your tax rate). As a result, you will be able to compound your capital at a much faster rate.
The CRA (Canada Revenue Agency) just increased the TFSA contribution limit by $7,000 in 2024. If you were 18 years or older (and a Canadian resident) in 2022, you would have at least $19,500 of contribution capacity in the TFSA today.
Say you want to invest $15,000 for passive income today. Here are three quality stocks that could collectively earn you nearly $600 per year in passive income.
An energy stock with an impressive record
Canadian Natural Resources (TSX:CNQ) is an energy stock that has defied the odds when it comes to returns and dividend growth. While it operates in a cyclical industry, it has delivered a very good 13% compounded annual total return over the past decade.
The company has high grade assets that produce gas and oil at an exceptionally low cost. It has decades of reserves that can support stable growth for years.
This TFSA stock has increased its dividend for 24 consecutive years by a 21% compounded annual rate. That is one of the best dividend records in Canada.
It yields ~4% today. If you put $5,000 of TFSA cash in CNQ stock today, you would earn $53.55 quarterly, or $214.2 annually.
A safe long-term bet for a TFSA stock
Royal Bank of Canada (TSX:RY) has been a very good quality dividend stock. There is a reason that Royal is persistently Canada’s highest valued stock by market cap.
Royal Bank is diversified by geography and product category. It tends to be a market leader in almost all its categories. The bank has a conservative balance sheet and ample liquidity coverage.
RBC has been one of the top performing Canadian banks with a total return of 172% over the past 10 years. In that time, it has grown its dividend by a ~7% annual rate.
RY yields 4.2% today. Put $5,000 of your TFSA cash into Royal Bank stock, and you would earn $51.06 quarterly, or $204.24 annually.
A growth and income stock for your TFSA
Brookfield Asset Management (TSX:BAM) is an intriguing pick for dividends and growth in a TFSA. Brookfield is one of the leading alternative asset managers in the world.
BAM was recently spun-out from Brookfield Corp. to clarify its business structure. As a result, BAM has a very clean balance sheet and is essentially a pure fee-collection business.
The company is growing by a mid-teens rate as it continues to fundraise for new funds and increase assets under management.
It has already increased its dividend once by 18%. It plans to distribute 90% of earnings per share to shareholders. As it grows, BAM’s dividend should increase substantially. BAM stock yields 3.66%. A $5,000 TFSA investment would earn $45.32 quarterly, or $181.28 annualized.
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Fool contributor Robin Brown has positions in Brookfield and Brookfield Asset Management. The Motley Fool recommends Brookfield, Brookfield Asset Management, Brookfield Corporation, and Canadian Natural Resources. The Motley Fool has a disclosure policy.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
