The TFSA (Tax-Free Savings Account) contribution room has increased by $6,500 in 2023. So, the cumulative TFSA contribution room available for Canadians has grown to $88,000 for those who started investing in this registered account in 2009.
The TFSA is an ideal account to buy and hold quality dividend stocks, allowing you to earn regular dividend income and benefit from long-term capital gains. Both dividends and capital gains are tax-sheltered in a TFSA, positioning investors to grow wealth at an accelerated pace over time.
Here are two Canadian dividend stocks where you can invest $6,500 in June 2023.
Brookfield Asset Management stock
Among the largest and fastest-growing asset managers globally, Brookfield Asset Management (TSX:BAM) owns and operates assets and businesses that provide essential services. It has over US$825 billion in assets under management, or AUM, of which US$432 billion is fee-bearing in nature. It expects fee-bearing capital to surpass US$973 billion in 2017, up from US$126 billion in 2017, indicating an annual growth rate of 24%.
Its fee-related margins range between 55% and 60%, while 83% of fees generated are tied to long-term contracts, enabling the company to benefit from a steady stream of income and pay investors a tasty dividend. Brookfield Asset Management pays shareholders an annual dividend of $1.74 per share, translating to a yield of 4.2%.
Armed with a debt-free balance sheet, BAM aims to grow fee-based earnings between 15% and 20% annually, which should allow the company to increase dividends consistently.
BAM operates in 30 countries across five continents and has onboarded 2,000 institutional clients. Its business is positioned to benefit from secular tailwinds across sectors such as renewable power, infrastructure, real estate, and credit.
BAM expects investments in alternative assets to grow from US$4 trillion in 2010 to US$23.2 trillion in 2026, making it a top stock to buy right now. In the last 12 months, BAM has raised US$98 billion, which will be deployed across multiple high-growth verticals.
In addition to its dividend, BAM stock also trades at a discount of 23% to consensus price target estimates.
goeasy stock
One of the fastest-growing dividend stocks on the TSX, goeasy (TSX:GSY) has successfully built a non-prime lending business in Canada. GSY stock has returned 205% in the last five years, 1,230% in the last 10 years, and 3,880% since June 2003.
Despite these market-thumping gains, goeasy currently offers shareholders a dividend yield of 3.7%. Moreover, these payouts have risen at an annual rate of 16.5% in the last 18 years.
goeasy’s expertise in the non-prime lending segment has allowed it to generate robust returns and deliver an average return on equity of 26.5% since 2018. It manages risks by establishing credit and underwriting practices, which results in stable credit performance across market cycles.
goeasy also maintains a solid balance sheet with diversified funding sources providing it with enough liquidity to fund its growth plans. It is in the early stages of product, channel, and geographic expansion and plans to grow its consumer loan portfolio to $4 billion by the end of 2024.
Down 48% from all-time highs, GSY stock is priced at eight times forward earnings. It trades at a discount of almost 50% to consensus price target estimates.
