© Reuters. 1 Top TSX Dividend Stock to Start a TFSA Retirement Nest
The Canadian government launched the Tax-Free Savings Account (TFSA) to encourage better savings practices in Canadian households. You can use the account like a regular savings account to hold cash to grow your wealth through interest income. However, the account offers much more if you make better use of the available contribution room.
Investing in a TFSA with high-yielding, income-generating assets can be a great way to build a strong self-managed retirement portfolio. The TFSA is an ideal investment vehicle for Canadians who want to build a portfolio for their retirement.
The account is flexible in that you can withdraw funds from your account without incurring penalties for early withdrawals. Any amount you withdraw will be added to the contribution space for the following calendar year.
Many Canadian retirees love the tax-free income they can earn from investing in a TFSA. Retirees who use their TFSA as a source of additional passive income don’t have to worry about moving to a higher tax bracket and triggering a clawback on their Old Age Security (OAS) income.
The TFSA contribution limit has increased by $6,000 in the 2022 update. The cumulative contribution room since account inception is $81,500.
Dividend stocks are a great choice for investors looking to build retirement funds into their TFSA. Today I’m going to discuss a high yielding dividend stock that might be ideal to start building such a TFSA portfolio.
TC Energy TC Energy (:TSX:)(NYSE:TRP) is a $70.87 billion market capitalization pipeline company headquartered in Calgary. The company owns and operates one of the largest energy commodity pipeline networks in North America. The company owns and operates energy infrastructure in Canada, the United States and Mexico.
As the world slowly shifts to renewable energy, many investors might not view investing in energy companies as a viable long-term investment. However, many renewable energy generation assets can be unpredictable.
Weather conditions can have an impact on the production of solar, hydroelectric and wind installations. Gas-fired power generation can produce the necessary energy without as drastic an environmental impact as oil and purpose.
A crazy takeaway Many countries are turning to natural gas power generation, and demand for this product is expected to increase in the coming years. TC Energy has a pipeline network that could help meet demand for years to come.
TC Energy also has a $24 billion capital program underway to drive revenue and cash flow growth over the next few years. TC Energy shares are trading at $72.26 per share at the time of writing and offer a hefty dividend yield of 4.98%. The company’s board increased its dividend payout by 3.4% in 2022, and it is likely to increase its dividends further in the coming years.
Buying and holding TC Energy shares in your TFSA can help you generate significant, tax-free long-term wealth growth through its reliable shareholder dividends.
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Dumb Contributor Adam Othman has no position in the stocks mentioned. The Motley Fool has no position in the stocks mentioned.