2 High-Yield Stocks to Boost Retirement Income in Your TFSA

Here’s why RioCan Real Estate Investment Trust (TSX:REI.UN) and a growing utility company deserve a closer look today.

| More on:

Canadian pensioners are searching for ways to increase the returns their get on their retirement savings.

A popular strategy involves owning income stocks inside a Tax-Free Savings Account (TFSA). Since its inception in 2009, the TFSA total contribution room has increased to $57,500 in 2018. At this level, investors who use the TFSA to hold a portfolio of high-yield stocks and REITs can generate a nice chunk of tax-free income every year.

Let’s take a look at two companies that might be interesting picks today.

RioCan Real Estate Investment Trust (TSX:REI.UN)

RioCan is undergoing a transition to diversify its revenue base. Canada’s largest shopping mall owner is monetizing roughly $2 billion in properties located in secondary markets and is using the proceeds to shore up the balance sheet and fund its new mixed-use developments located in six core urban markets.

As of the Q2 2018 earnings report, RioCan had closed, firm, or conditional deals in place for $1.2 billion of properties.

Over the next decade, RioCan has plans to build up to 10,000 residential units. The first projects are well underway and should be completed through the end of 2018 and in early 2019.

The company’s buildings continue to see strong demand, despite the difficulties faced by some retail segments. In fact, RioCan has managed to replace more than 100% of the revenue lost through the closures of two major department store chains. Committed occupancy was 97% at the end of June.

RioCan pays a monthly distribution of $0.12 per unit for an annualized yield of 5.8%.

Algonquin Power and Utilities (TSX:AQN)(NYSE:AQN)

Algonquin Power owns renewable energy and natural gas distribution businesses with a major focus on the United States. The company has grown significantly over the years through strategic acquisitions, and that trend should continue as the utility sector consolidates.

Algonquin Power also has a portfolio of organic projects in the works. The company recently commissioned its 75 MW Amherst Island wind project and received a regulatory order in Missouri supporting investment a 600 MW wind development.

Algonquin Power reported strong Q2 2018 results, with revenue and adjusted EBITDA rising 9% compared to the same period last year. Adjusted funds from operations increased 26%, and adjusted net earnings per share jumped 22%.

Management recently raised the dividend by 10%. The current payout provides a yield of 5.2%.

The bottom line

RioCan and Algonquin Power pay attractive distributions that should be safe and have growth programs to support ongoing increases in the coming years.

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 Andrew Walker has no position in any stock mentioned.

More on Dividend Stocks

Canadian dollars in a magnifying glass
Dividend Stocks

3 High-Yield Dividend Stocks That Are Screaming Buys Right Now

Are you looking for great income stocks? Here's a trio of high-yield dividend stocks that pay insane yields right now.

Read more »

Piggy bank with word TFSA for tax-free savings accounts.
Dividend Stocks

Transform a $5,000 TFSA Into a $50,000 Retirement Nest Egg

The TFSA is a powerful tool that can grow a small investment into a substantial retirement nest egg over time.

Read more »

A meter measures energy use.
Dividend Stocks

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

Fortis has increased its dividend annually for the past five decades.

Read more »

analyze data
Dividend Stocks

3 Dividend Stocks That Are Screaming Buys in November

Here are three top dividend stocks long-term investors won't want to ignore during this part of the market cycle.

Read more »

senior relaxes in hammock with e-book
Dividend Stocks

Generate $175/Month in Passive Income With a $30,000 Investment

Dividend aristocrats offer reliability, and many of them also offer generous yields. With sizable enough discounts, these yields can become…

Read more »

dividends can compound over time
Dividend Stocks

Best Dividend Stocks to Buy Now for Canadian Investors

These three stocks would be excellent additions to your portfolios, given their solid underlying businesses, consistent dividend growth, and healthy…

Read more »

data analyze research
Dividend Stocks

3 Undervalued Stocks to Watch in November

Not all undervalued and discounted stocks are destined or poised to make a comeback soon, and a protracted timeline can…

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

The Perfect TFSA Stocks for Long-Term Growth

Two industry heavyweights are perfect stock holdings in a TFSA for long-term money growth.

Read more »