TFSA: How to Invest $6,500 for Reliable Passive Income in 2023

Are you looking to earn safe and reliable passive income from your $6,500 TFSA contribution? These three Canadian stocks are about as safe as it gets!

| More on:

It’s a new year, and TFSA (Tax-Free Savings Account) investors get to add a fresh load of new capital to their accounts. Given how inflation has been soaring, the Canada Revenue Agency has allowed Canadians to add $6,500 to the TFSA in 2023.

That was a nice $500 increase (or 8% increase) from last year. Today, Canadians that were 18 years or older in 2009 can contribute a grand combined total of $88,000! If you are wondering how to invest that fresh $6,500 for reliable passive income, here are three defensive investment ideas to consider.

TD Bank: A top financial for long-term TFSA income growth

If you want to own a Canadian blue-chip stock, Toronto-Dominion Bank (TSX:TD) is a good choice for passive income. This stock has delivered 10% annual compounded total returns for the past decade. TD has a very long history of paying dividends.

In fact, it has been paying a dividend for 166 years. It has increased its dividend by an 11% annualized rate ever since 1995. Last year, it increased its dividend by over 12%!

All around, TD offers a business that is diversified geographically and by segment. As with all banks, it is economically sensitive. However, its diverse business model and strong balance sheet should enable it to perform resiliently through most economic cycles.

Today, this TFSA stock earns a 4.3% dividend yield. If you put $6,500 into TD stock, you would earn around $70 every quarter.

Fortis: Almost a “Dividend King”

Another stock for reliable TFSA income is Fortis (TSX:FTS). It has consecutively grown its dividend for 49 years! Next year, it will hit “Dividend King” status, which is a major statement about the quality and longevity of its business.

Fortis provides essential energy transmission and distribution services across North America. Given that 99% of its business is regulated, it earns a very predictable baseline of earnings. The company has a large $22 billion capital plan that is anticipated to achieve 6% annual rate base growth over the next five years.

The company hopes to achieve 4-6% annual dividend growth as well. It has an 80% payout ratio that indicates sustainability. Fortis stock yields 4% today. Invest $6,500 into Fortis, and you’d earn $65.54 every quarter.

Granite REIT: Sleep-easy TFSA income

One final safe stock to consider buying for income in your TFSA is Granite REIT (TSX:GRT.UN). It operates a defensive portfolio of logistics, manufacturing, and distribution properties across Canada, the U.S., and Europe. Granite has high 99% occupancy, an average lease life of 5.7 years, and most of its top tenants have a high credit quality.

It has increased its annual distribution for 12 consecutive years. The real estate investment trust (REIT) has a best-in-class balance sheet with only 30% leverage. It also has significant $1.2 billion of liquidity that affords it financial flexibility.

The REIT has nearly five million square feet of properties in development. This should help accrete mid-single digit growth over 2023. Not to mention, industrial property demand has been very strong — so strong that rental rate growth is a possibility as well.

Granite stock yields 4.1% right now. It has a conservative dividend-payout ratio of 80%. A $6,500 investment in Granite would earn $21.87 of monthly tax-free income for TFSA investors.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDTOTAL PAYOUTFREQUENCY
TD Bank88.2873$0.96$70.08Quarterly
Fortis55.66116$0.565$65.54Quarterly
Granite REIT78.6582$0.267$21.87Monthly
Prices as of January 20, 2023

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 Robin Brown has positions in Granite Real Estate Investment Trust. The Motley Fool recommends Fortis and Granite Real Estate Investment Trust. The Motley Fool has a disclosure policy.

More on Dividend Stocks

dividends can compound over time
Dividend Stocks

Want a 7% Yield? The 3 TSX Stocks to Buy Today

These TSX stocks are offering high yields of over 7%, making them attractive for investors seeking steady passive income.

Read more »

how to save money
Dividend Stocks

The Smartest Dividend Stocks to Buy With $200 Right Now

These smartest dividend stocks can consistently pay and increase their dividends in the coming years, irrespective of the macro uncertainty.

Read more »

Electricity transmission towers with orange glowing wires against night sky
Dividend Stocks

3 Utility Stocks That Are Smart Buys for Canadians in November

These utility stocks benefit from regulated businesses and generate predictable cash flows that support higher dividend payouts.

Read more »

Start line on the highway
Dividend Stocks

Invest $10,000 in This Dividend Stock for $600 in Passive Income

Do you want to generate passive income? Forget the rental unit! This option will save you the mortgage yet still…

Read more »

Senior uses a laptop computer
Dividend Stocks

1 Reliable Dividend Stock for the Ultimate Retirement Income Stream

TD Bank (TSX:TD) shares are way too cheap with way too swollen a yield for retirees to pass up right…

Read more »

A worker drinks out of a mug in an office.
Dividend Stocks

Is Brookfield Infrastructure Partners a Buy for its 4.75% Yield?

Brookfield Infrastructure Partners (BIP) has a 4.75% dividend yield. Is it worth it?

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

Where to Invest Your $7,000 TFSA Contribution

The TFSA is attractive for investors who want to generate tax-free passive income.

Read more »

The TFSA is a powerful savings vehicle for Canadians who are saving for retirement.
Dividend Stocks

TFSA Investors: 3 Dividend Stocks Worth Holding Forever

These TSX stocks have the potential to grow their dividends over the next decade, making them top investments for TFSA…

Read more »