If you invest it wisely, say in dividend stocks averaging a 5% yield, that could mean an extra $350 in tax-free income each year. Over 10 years, assuming a modest 6% annual return, that $7,000 could grow to nearly $12,500 without any taxes to worry about! It’s like a little bonus from the government that can really add up over time, so why not make the most of it?
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Investing in Hydro One
Utility stocks like Hydro One (TSX) are great options for investors seeking stability and reliable dividends. Utility companies provide essential services like electricity and water, which means they’re always in demand, no matter the economic conditions. Hydro One, operating in Ontario, has a strong presence in power distribution and transmission, making it a steady performer in the Canadian market.
Performance and Stability
Hydro One’s recent performance has been impressive, with a 32.8% increase over the past year, reflecting its resilience and steady growth. The company reported quarterly revenue growth of 9.4% year-over-year. With a forward price/earnings (P/E) of 22.6 and a trailing annual dividend yield of 2.6%, it’s an attractive choice for building passive income. Hydro One’s low beta of 0.34 indicates it is less volatile than the market, making it a solid pick for risk-averse investors.
Investing in Royal Bank of Canada
Bank stocks like Royal Bank of Canada (TSX) are also excellent options for those seeking growth, income, and stability. RBC benefits from a diverse range of financial services, ensuring steady revenue growth even in challenging economic times.
Recent Earnings and Growth
RBC recently posted revenue growth of 13% year-over-year, alongside a 16.2% growth in quarterly earnings. With a market cap of $234.7 billion and a forward annual dividend yield of 3.4%, RBC offers both income and long-term capital appreciation. Its beta of 0.84 suggests it is less volatile than the broader market, making it a reliable option for investors.
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Utilizing your extra $7,000 in your TFSA to invest in stable dividend-paying stocks like Hydro One and Royal Bank of Canada can lead to significant tax-free income growth. With their proven track records and reliable dividends, these investments are not only wise choices but can also provide peace of mind in uncertain market conditions. Why not take advantage of this golden opportunity?