Stash These 4 Dividend Stocks in Your TFSA for the Long Term

Canadians may be contributing to their TFSAs early in 2018, and they should be targeting companies such as Finning International Inc. (TSX:FTT) and others for tax-free income and capital appreciation.

| More on:

Statistics Canada released its GDP report for November 2017 on January 31. Real GDP grew by 0.4% in November with 17 of 20 industrial sectors showing positive growth. Positive economic news spurred the Bank of Canada to raise the benchmark interest rate by 0.25% on January 17. The S&P/TSX Index has not fared as well, dropping 5.2% in 2018 as of close on February 6.

The annual contribution limit on the Tax-Free Savings Account (TFSA) is $5,500 for 2018. The cumulative contribution for those who may not have taken advantage of the account as of yet is $57,500. Today, we are going to look at four stocks to zero in on in light of recent GDP numbers that could be attractive income generators for your TFSA, with the possibility of solid capital appreciation to boot.

Finning International Inc. (TSX:FTT)

Finning is a Vancouver-based company engaged in the sale and servicing of equipment in Canada and around the world. Finning stock has climbed 7.8% in 2018.

The Trudeau government in Canada and the Trump administration in the United States is expected to move forward on bold infrastructure plans in 2018 and beyond. In its recent 2017 fourth-quarter and full-year results Finning reported a 16% jump in revenues for Q4 and a 143% spike in EBITDA. The board of directors approved a dividend of $0.19 per share, representing a 2.2% dividend yield.

Equitable Group Inc. (TSX:EQB)

Equitable Group stock has fallen 5.5% in 2018. Investors have been anxious about real estate after new mortgage rules were introduced by the OSFI in January. The anxiety appears to have been vindicated with recent data showing a steep drop in January home sales in Toronto.

In November 2017, the output of real estate agents and brokers rose 4%. The promise of the new stress test appears to have motivated buyers in late 2017. Real estate industry experts expect the market to stabilize by mid-2018, and tighter rules could motivate new buyers to flock to alternative lenders like Equitable Group. The company last delivered a dividend of $0.25 per share, representing a 1.5% dividend yield.

Leon’s Furniture Ltd. (TSX:LNF)

Leon’s stock has dropped 7.4% in 2018. Canada experienced its largest manufacturing growth since February 2014 in November 2017 — activity jumped 1.8%. There was a 2.9% rise in output for furniture and related products as furniture retail continues to show strong results going forward.

In the 2017 third quarter, Leon’s revenue grew 3.3% year over year, and adjusted net income rose 9.9%. The company is expected to release its 2017 fourth-quarter and full-year results this month. The stock also offers a dividend of $0.12 per share with a 2.8% dividend yield.

Sun Life Financial Inc. (TSX:SLF)(NYSE:SLF)

Sun Life stock rose 0.41% on February 6. Shares are up 2.3% year over year. The finance and insurance sector grew 0.3% in November 2017. In its third-quarter results, Sun Life reported net income of $817 million compared to $737 million in the prior year. The company stands to gain from the long-term growth of the Asian middle class with its footprint overseas.

Sun Life last offered a quarterly dividend of $0.46 per share, representing a 3.5% dividend yield.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned. Finning is a recommendation of Stock Advisor Canada.

More on Dividend Stocks

Train cars pass over trestle bridge in the mountains
Dividend Stocks

Is CNR Stock a Buy, Sell, or Hold for 2025?

Can CNR stock continue its long-term outperformance into 2025 and beyond? Let's explore whether now is a good time to…

Read more »

coins jump into piggy bank
Dividend Stocks

The Smartest Dividend Stocks to Buy With $500 Right Now

These top dividend stocks both offer attractive yields and trade off their highs, making them two of the best to…

Read more »

Middle aged man drinks coffee
Dividend Stocks

Here’s the Average TFSA Balance at Age 35 in Canada

At age 35, it might not seem like you need to be thinking about your future cash flow. But ideally,…

Read more »

ETF stands for Exchange Traded Fund
Dividend Stocks

How to Invest Your $7,000 TFSA Contribution in 2024

Here's how I would prioritize a $7,000 TFSA contribution for growth and income.

Read more »

a man relaxes with his feet on a pile of books
Dividend Stocks

CPP Pensioners: Watch for These Important Updates

The CPP is an excellent tool for retirees, but be sure to stay on top of important updates like these.

Read more »

Technology
Dividend Stocks

TFSA Investors: 3 Dividend Stocks I’d Buy and Hold Forever

These TSX dividend stocks are likely to help TFSA investors earn steady and growing passive income for decades.

Read more »

four people hold happy emoji masks
Dividend Stocks

Love Dividend Growth? Check Out These 2 Income-Boosting Stocks

National Bank of Canada (TSX:NA) and another Canadian dividend-growth stock are looking like a bargain going into December 2024.

Read more »

An investor uses a tablet
Dividend Stocks

A Dividend Giant I’d Buy Over Enbridge Stock Right Now

Enbridge stock may seem like the best of the best in terms of dividends, but honestly this one is far…

Read more »