The Canadian financial market is awash with investment opportunities and products that meet various individual needs, including your desire for hefty annual yields and monthly passive income streams. You could earn as much as 21% annually in dividend distributions from a new breed of high-yield dividend exchange-traded funds (ETFs).

However, how you invest to generate passive income depends as much on your desired level of income streams and payout timing as it does on your portfolio’s capacity to tolerate associated investment risks.

How to earn 21% yield on a Canadian dividend ETF

Single-stock ETFs are a new crop of high-yield investment products gaining popularity, especially among young investors. Recently launched in August 2024, the Harvest NVIDIA Enhanced High Income Shares ETF (TSX:NVHE) is an increasingly popular example based on one of the hottest stocks in the market today. It has paid three high-yield monthly income distributions since its inception, yielding 21% annually.

The Harvest NVIDIA High Income ETF invests all its assets in Nvidia (NASDAQ:NVDA) stock – a global leader in artificial intelligence (AI) hardware, which bundles its offerings with an AI software development platform that creates wide moats and a near-monopoly in the rapidly growing AI market.

How does the high-yield dividend ETF make money for investors? The fund offers investors access to Nvidia stock’s upside potential and more. Its fund manager uses substantial leverage and actively writes covered call options on up to 50% of the portfolio. These active strategies help enhance the $50 million portfolio’s liquidity to fund recurring monthly dividends.

While the ETF’s hefty yield and high-frequency payouts are alluring, significant risks exist. The medium-to-high-risk rated dividend ETF experiences considerable volatility associated with a single stock position. Its leverage amplifies daily gains and losses, and the written calls may limit investors’ participation in Nvidia stock’s upside potential. If Nvidia stock rallies too high too fast, options buyers can theoretically call them.

Be warned! Despite the added risk and return layers, total returns on some leveraged single-stock ETFs fail to outperform main stock index returns over lengthy periods.

Management fees, at 0.4%, are on the high side, though still affordable at $4 on every $1,000 invested. The ETF’s management expense ratio (MER) will only be known after its first anniversary in August 2025.

A medium-risk ETF to buy for high-yield passive income

Investors not sold on single-stock ETFs can still generate high-yield passive income with the BMO Covered Call Utilities ETF (TSX:ZWU). The medium-risk fund, designed for investors seeking higher income from equity portfolios, has paid monthly distributions since late 2011, and its current payouts in 2024 should yield 7.6% annually. This level of return, sustained over time and with consistent dividend reinvestment, can double your investment capital in less than a decade – as estimated by the Rule of 72.

An investment in the BMO Covered Call Utilities ETF gives investors access to a $1.9 billion portfolio with 89 holdings. The widely diversified fund spreads investment risks among several utilities stocks, including telecommunications and pipeline companies with highly regulated and contracted, highly visible cash flows. The portfolio includes Canadian dividend aristocrat Enbridge stock and dividend kings Fortis and Canadian Utilities. Nearly 40% of its holdings are U.S. investments.

Managed by professionals at the Bank of Montreal’s (TSX:BMO) Global Asset Management subsidiary, the high-yield dividend ETF employs an options writing strategy that augments its dividend portfolio’s income generation.

Given a management expense ratio of 0.71%, investors may expect to pay about $7.10 annually on every $1,000 invested. Actively managed ETFs are generally more expensive to hold than passively managed index funds.

Investor takeaway

These two high-yield dividend ETF options cater to different risk appetites while offering attractive yields for income-focused investors. The Harvest NVIDIA ETF presents an opportunity for aggressive investors comfortable with concentrated risk and potentially higher returns, while the BMO Covered Call Utilities ETF offers a more balanced approach with its diversified portfolio and proven track record. Please consider your portfolio’s capacity to tolerate high-risk and income needs before committing capital to either option.

Both ETFs are eligible for various registered accounts. They can be versatile tools for building tax-efficient income streams in your investment portfolio in 2025.

The post 2 High-Yield Dividend ETFs to Buy to Generate Passive Income appeared first on The Motley Fool Canada.

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• 3 AI Stocks I Like Better Than NVIDIA

Fool contributor Brian Paradza has no position in any of the stocks mentioned. The Motley Fool recommends Enbridge, Fortis, and Nvidia. The Motley Fool has a disclosure policy.

Navigating the Canada Revenue Agency’s (CRA) guidelines for Tax-Free Savings Accounts (TFSAs) can feel like tiptoeing through a minefield. But fear not! With a bit of savvy investing and awareness of potential pitfalls, you can keep your TFSA in the CRA’s good books. Let’s explore some common red flags and how to sidestep them, with a spotlight on the Vanguard FTSE Canada All Cap Index ETF (TSX:VCN) as a prudent investment choice.

Top red flags

First up, the allure of over-contributing. It’s tempting to stash away as much as possible into your TFSA, especially with the promise of tax-free growth. However, the CRA sets annual contribution limits, at $7,000 for 2024 and 2025. Exceeding this limit results in a 1% penalty per month on the excess amount. To avoid this, keep meticulous records of your contributions and withdrawals. If you’re ever in doubt, a quick check with the CRA or your financial institution can clarify your available room.

Then there’s frequent trading. While the stock market’s ups and downs can be exhilarating, treating your TFSA like a day-trading platform is a no-go. The CRA may classify frequent trading as business activity, making your earnings taxable. To stay on the safe side, adopt a buy-and-hold strategy. Investing in diversified exchange-traded funds (ETF) like VCN encourages long-term holding, aligning with the TFSA’s intended purpose and keeping the taxman at bay.

Holding foreign dividend-paying investments in your TFSA might seem like a smart move, but there’s a catch. Dividends from foreign stocks, such as U.S. companies, can be subject to withholding taxes. Often around 15%. This diminishes your returns and negates some benefits of the TFSA. By focusing on Canadian investments, like those within VCN, you can maximize tax efficiency and fully enjoy the perks of your TFSA.

Achieving rapid, substantial gains in your TFSA is the dream, right? But if these gains result from speculative or high-risk investments, the CRA might take notice. They could question whether your TFSA is being used appropriately. To maintain peace of mind, focus on stable, long-term investments. VCN, for instance, offers exposure to a broad range of Canadian equities, promoting steady growth over time.

Why VCN ETF

Now, let’s delve into why VCN is a stellar choice for your TFSA. The Vanguard FTSE Canada All Cap Index ETF provides comprehensive exposure to the Canadian stock market, encompassing large, medium, and small-cap companies. This diversification spreads risk and aligns with a long-term investment strategy, which the CRA favours.

As of November 29, 2024, VCN boasted a year-to-date return of 26.3% and a one-year return of 31.2%. Its management expense ratio (MER) is a low 0.05%, ensuring that more of your money works for you. The ETF‘s top holdings include reputable companies as well that offer a balanced mix of sectors.

Looking ahead, VCN’s diversified portfolio positions it well to capture the growth of the Canadian economy. By investing in VCN within your TFSA, you adhere to CRA guidelines by maintaining a passive, long-term investment approach. This strategy minimizes red flags and allows you to reap the benefits of tax-free growth.

Bottom line

In summary, being mindful of the CRA’s red flags and choosing investments like VCN can help you maximize your TFSA’s potential. By avoiding over-contribution, limiting frequent trading, focusing on Canadian dividend-paying stocks, and steering clear of business activities within your TFSA, you can enjoy the tax-free advantages without unwanted CRA attention.

The post The CRA is Watching TFSA Holders: Here Are Some Red Flags to Avoid appeared first on The Motley Fool Canada.

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• Invest $7,000 in This Dividend Stock for $3,727.60 in Passive Income
• 2 High-Yield Dividend Stocks for Canadian Retirees
• How to Earn $2,680 of Annual Passive Income That the CRA Won’t Tax
• Buy 1,970 Shares of This Top Dividend Stock for $252.44/Month in Passive Income

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Maximizing your Tax-Free Savings Account (TFSA) contributions is one of the smartest financial moves Canadian investors can make, especially with the annual limit now set at $7,000 for 2024 and again in 2025. A TFSA provides unparalleled benefits, enabling your investments to grow entirely tax-free. Whether you’re earning dividends, interest, or capital gains, all profits within a TFSA remain untaxed, giving you more money to reinvest and take advantage of compounding. For long-term wealth-building or even supplementing retirement income, consistently meeting your TFSA limits is a cornerstone of a successful strategy.

Bank on a bank

Dividend-paying stocks like National Bank of Canada (TSX:NA) are an excellent fit for a TFSA. Dividends provide regular income, and when held in a TFSA, those payouts are completely tax-free. This allows investors to reinvest the full amount of their dividends, thus turbocharging the power of compounding.

National Bank stock is a standout choice for dividend investors. The dividend stock has a solid history of growth and profitability, with strong financial results that underpin its dividend payments. As of writing, the bank reported impressive fourth-quarter results, with adjusted net income climbing to $928 million, up from $850 million in the same period last year. Much of this growth was driven by a 17% surge in adjusted net income from its wealth management business, highlighting its diversified revenue streams and resilience. This robust performance showcases the bank’s ability to thrive even in a complex economic environment.

Currently, National Bank offers a forward annual dividend of $4.40, providing a yield of approximately 3.13%. For investors seeking reliable passive income, this is a compelling yield, especially when the dividends are sheltered from taxes in a TFSA. Over time, this combination of steady income and tax-free growth can significantly enhance your portfolio’s value. Beyond dividends, the dividend stock’s price has also shown strong performance, contributing to attractive total returns that blend both income and capital appreciation.

Looking ahead

National Bank’s outlook remains promising. Recent interest rate cuts from the Bank of Canada have provided a boost to loan growth while reducing the risk of loan defaults. This supportive environment, coupled with the bank’s strength in wealth management and financial markets, positions it well for continued success. With its diversified operations, National Bank is well-equipped to navigate economic shifts while maintaining profitability.

So, when you invest in a dividend stock like National Bank within your TFSA, you’re setting yourself up for both immediate income and long-term growth. The tax-free nature of the TFSA amplifies the benefits, enabling your portfolio to grow more effectively. By reinvesting your dividends, you can harness the full power of compounding, turning small contributions into a substantial nest egg over time.

For Canadian investors, meeting the TFSA limit each year is more than just a smart financial habit. It’s an opportunity to maximize your wealth-building potential. Combining this with investments in top-performing dividend stocks like National Bank of Canada creates a powerful strategy for generating tax-free income and capital appreciation. Over the years, this approach can help you achieve your financial goals, whether you’re saving for retirement, a major purchase, or simply building financial security.

Bottom line

In the end, the TFSA isn’t just a savings account. It’s a tool for financial freedom. Pairing it with high-quality dividend stocks like National Bank ensures you’re making the most of this powerful investment vehicle. In fact, that $7,000 could gain you a lot through returns and dividends if shares rise another 49%, as they have in the last year!

Now, investors can gain $228.80 in dividends and $3,498.80 in returns! That’s a total of $3,727.60 in passive income! With consistent contributions and a focus on growth, you can build a portfolio that grows tax-free and supports your financial dreams for decades to come.

The post Invest $7,000 in This Dividend Stock for $3,727.60 in Passive Income appeared first on The Motley Fool Canada.

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Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The steep jump in the cost of living in recent years is tough for retirees who might not have many options for increasing their income. One popular strategy, however, is to hold top TSX dividend stocks inside a self-directed Tax-Free Savings Account (TFSA).

With the TSX near its all-time high, it makes sense to seek out dividend stocks that have good track records of distribution growth.

Enbridge

Enbridge (TSX:ENB) recently announced a 3% dividend increase. This marks 30 consecutive years that the board has given shareholders a raise.

Enbridge is working on a $27 billion capital program that should drive revenue and cash flow growth in the coming years. The company also completed its US$14 billion acquisition of three natural gas utilities in the United States in 2024. These assets will provide an additional revenue boost in 2025 and help diversify the overall portfolio by both geography and segment. Enbridge is now the largest natural gas utility operator in North America. The outlook for natural gas demand should be positive as gas-fired power generation is expected to expand to provide electricity to new artificial intelligence data centres.

Enbridge’s core oil and natural gas transmission system remains strategically important for the smooth operation of the Canadian and U.S. economies. The pipeline networks move about 30% of the oil produced in Canada and the United States and roughly 20% of the natural gas used by American homes and businesses.

Investors who buy ENB stock at the current level can get a dividend yield of 6.1%.

TD Bank

TD (TSX:TD) is down about 7% in 2024 compared to a gain of more than 20% for the TSX. The company ran into trouble in the U.S., where regulators investigated TD for not having adequate procedures in place to identify and prevent money laundering. The issue has finally been resolved, with TD being hit with roughly US$3 billion in fines. Regulators also put an asset cap in place for TD’s U.S. business. This means the growth strategy in the American market is on hold.

TD is bringing in a new chief executive officer in 2025. The new boss will have to sort out a new growth strategy over the medium term while the asset cap remains in place south of the border. Despite the challenges, TD is still a very profitable bank and has a strong capital position to ride out the turbulence and even make strategic acquisitions in other markets.

The stock trades near $79 at the time of writing. It was as high as $108 in early 2022, so there is decent upside potential for a recovery. In the meantime, investors can get a dividend yield of 5.1% from TD stock.

The bottom line on top stocks for passive income

Enbridge and TD are good examples of stocks that pay attractive dividends that should continue to grow. If you have some cash to put to work in a self-directed TFSA focused on dividend income, these top TSX stocks deserve to be on your radar today.

The post 2 High-Yield Dividend Stocks for Canadian Retirees appeared first on The Motley Fool Canada.

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The Motley Fool recommends Enbridge. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker has no position in any stock mentioned.

If you want to earn tax-free passive income, the TFSA (Tax-Free Savings Account) is your best bet. Not only can you contribute and invest tax free, but when you want to withdraw your cash, there is no tax consequence.

The TFSA is the best place to grow passive income

Since you don’t have to worry about tax, your returns are your returns. That’s why the TFSA is so ideal for Canadians wanting passive income.

With the recently announced $7,000 TFSA contribution increase for 2025, Canadians can invest up to $102,000 in their TFSA. That is a substantial sum. The good news is that even half of that amount ($51,000) can provide a decent passive income stream.

In fact, with an average portfolio yield of 5%, you could earn $2,682 of tax-free passive income per year. Here’s one mini portfolio that could help you reach that goal.

An energy infrastructure stock for safe dividends

Pembina Pipeline (TSX:PPL) is a solid anchor for any TFSA portfolio focused on passive income. It has a resilient business that provides crucial energy infrastructure. Over 80% of its income is contracted. That gives sufficient support to its attractive 4.9% dividend yield.

The great thing is that its contracted income stream continues to grow as it brings on more infrastructure projects. The company certainly has the balance sheet and cash flow generation to support more opportunities.

Currently, it is developing one of only a few LNG export plants that have been approved in British Columbia. If it can complete that project on time and on budget, it could provide attractive returns ahead.

Pembina stock pays a $0.69 per share quarterly dividend. If you put $17,000 to work in Pembina stock today, you would earn $207 quarterly or $828 annually.

A real estate stock for steady passive income

Another excellent stock for passive income is Dream Industrial Real Estate Investment Trust (TSX:DIR.UN). Dream is one of the largest industrial property landlords in Canada. It also has a substantial portfolio in Europe.

Dream focuses on urban-focused, multi-bay, multi-tenant properties. These properties are attractive to a wide mix of tenants. It has strong 95%-plus occupancy.

Its good locations have supported substantial rent growth. In Canada, its average rental rate remains 38% below market. This just means there could be substantial organic rental rate growth to come.

Dream yields 5.5% right now. It pays a $0.05833 per unit monthly distribution. Put $17,000 of TFSA cash in Dream and you would earn $78.40 of monthly passive income, or $940 annualized.

A trucking stock with a big dividend

Mullen Group (TSX:MTL) is one of Canada’s largest logistics and transportation companies. Mullen was largely Western Canada and energy focused. However, it has significantly diversified its service and geographic focus in the past few years.

This hasn’t been a great stock for long-term shareholders. However, the business has really started to improve over the past five years. The stock has not moved in lock step with its improved earnings per share growth. That creates a bit of a value opportunity. Collect a nice dividend while you wait.

Mullen yields 5.4% right now. It pays a $0.21 per share quarterly dividend. All tallied, $17,000 invested in Mullen stock would earn $228.70 in quarterly passive income or $914.76 annualized.

The post How to Earn $2,680 of Annual Passive Income That the CRA Won’t Tax appeared first on The Motley Fool Canada.

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Fool contributor Robin Brown has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends the Mullen Group. The Motley Fool recommends Dream Industrial Real Estate Investment Trust and Pembina Pipeline. The Motley Fool has a disclosure policy.

Investing in monthly dividend stocks is often hailed as one of the easiest and most effective strategies for creating long-term passive income. Why? It’s simple. Monthly dividends mirror the rhythm of everyday life. Most of us pay bills, rent, and other recurring expenses monthly. Having a consistent income stream that aligns with this schedule makes budgeting seamless and predictable. Plus, the more frequent payouts allow investors to reinvest their dividends faster. This accelerates compounding and magnifies growth over time.

Whitecap stock

When it comes to monthly dividend stocks, Whitecap Resources (TSX:WCP) is a prime example of why these investments are so attractive. Offering a forward annual dividend yield of approximately 7.2% and a strong history of delivering consistent returns to shareholders, Whitecap stands out as a reliable choice for income-focused investors. Unlike many energy companies, which can be vulnerable to market volatility, WCP has proven its ability to weather economic ups and downs. Thanks to its operational efficiency and commitment to rewarding shareholders.

One of the key reasons to consider WCP is its robust financial health. As of the most recent quarter, Whitecap generated $1.9 billion in operating cash flow over the past year, coupled with $524.4 million in levered free cash flow. These numbers reflect the dividend stock’s ability to sustain its dividend payouts while maintaining financial flexibility for future investments and debt management. With a debt-to-equity ratio of just 21.6% and disciplined capital allocation, WCP has struck an impressive balance between growth and income.

Recent earnings further bolster the case for investing in WCP. The dividend stock reported quarterly earnings growth of a staggering 79.6% year-over-year, demonstrating its ability to thrive in a challenging economic climate. Despite a slight decline in revenue growth, WCP’s profitability remains strong, with a profit margin of 26.5% and an operating margin of 47.9%. These metrics underline its efficiency in converting revenue into profit and ability to sustain its high-margin operations.

Looking ahead

Whitecap’s strategic focus positions it for a promising future. The dividend stock continues to prioritize high-margin assets and operational efficiencies, ensuring it can sustain its strong cash flow. Plus, its commitment to reducing debt and maintaining a conservative payout ratio of just over 50% underscores its dedication to both growth and income stability. These efforts not only benefit current shareholders but also set the stage for potential dividend increases down the line.

Monthly dividend stocks also align well with long-term financial goals. For younger investors, the opportunity to reinvest dividends more frequently can lead to exponential portfolio growth over time. For retirees or those nearing retirement, the consistent income stream simplifies financial planning and provides peace of mind. WCP exemplifies this balance, offering robust income today with the potential for growth tomorrow. In fact, shares could rise another 8% as they have in the last year. If that happens, investors could earn $1,438.10 in dividends, and $1,591.20 in returns. That totals $3,029.30, or $252.44 each month, as seen below.

Foolish takeaway

Investing in monthly dividend stocks like Whitecap Resources can be a game-changer for those seeking to build wealth and generate consistent passive income. WCP not only offers a high yield and dependable payouts but also demonstrates financial stability and a clear focus on long-term growth. Whether you’re starting your investment journey or looking for reliable income in retirement, monthly dividend stocks provide a simple, effective way to make your money work for you. With WCP in your portfolio, you’re not just investing in a stock. You’re investing in a system that delivers steady rewards month after month.

The post Buy 1,970 Shares of This Top Dividend Stock for $252.44/Month in Passive Income appeared first on The Motley Fool Canada.

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Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Whitecap Resources. The Motley Fool has a disclosure policy.

With all the chatter about questionable valuations and the relative lack of market corrections, it’s certainly tempting to sit on one’s hand and keep one’s latest 2024 TFSA (Tax-Free Savings Account) contributions in high-interest savings. As for investing ideas, perhaps put them on ice until the next inevitable 10–20% market drawdown finally does hit.

Indeed, we didn’t have a big one in 2024, and while there’s a good chance one may be in the cards for 2025, there’s also a possibility that those waiting in cash could be stuck in without a market correction to put it to work for another year.

Indeed, valuations have gone up quite a bit, but that alone may not be enough to push stocks into a correction of sorts. Further, the Trump presidency seems to have brought forth a wave of retail enthusiasm. Despite higher share prices, investors seem more than willing to pay an above-average valuation multiple for entry into some of the U.S. markets’ hottest names. Whether that’s a red flag for value investors, though, remains to be seen.

Here in Canada, many names are heating up, but with a greater abundance of deals and yields, I still think there are opportunities to snag a fairly priced stock right now.

Stop waiting for a correction. Invest and be ready to respond should it happen.

Even if a correction were to begin in the days and weeks after you’ve bought, you can always add to a position on weakness. Further, I think a strong case could be made that the following names could be dealt relatively less damage in case of a painful broader market pullback.

Remember, just because a market is overdue for a correction doesn’t mean it becomes even more overdue in the new year if no crisis has a chance to reveal itself. Of course, when a stock is running hot, the next pullback could be made much more violent once a crisis event finally happens.

In any case, I think it makes sense to consider buying some of the interesting names on the TSX Index before it can heat up further and valuations become that much loftier than they are now, perhaps on the back of bullish new drivers in the new year.

CN Rail

CN Rail (TSX:CNR) stands out as a terrific bargain buy while it’s going for 18.8 times forward price-to-earnings (P/E), with a dividend that’s still close to 2.2%. Indeed, CN Rail has an expansive network that makes it virtually untouchable from potential rivals in the transportation scene.

Despite lingering headwinds, I view CNR stock as a severely undervalued bargain compared to its top peer, CPKC or CP Rail (TSX:CP), which could suffer a drastic valuation reset on the back of potential Trump tariffs.

Either way, I’d much rather be in CNR stock at a considerable discount than CPKC, especially if investors are still overrating and overvaluing CPKC’s U.S.-Canada-Mexico network. I think they are.

Either way, CNR stock stands out as the relatively safer bet as the firm takes steps to drive efficiencies ahead of what could be a comeback year of sorts. Of course, tariffs will still take some wind out of CN’s back. But with lower expectations and relatively less cross-border exposure than CPKC, I’d argue CNR stock is the better, safer bet for new TFSA investors.

The post 1 Dividend Growth Star Perfect for a TFSA appeared first on The Motley Fool Canada.

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Fool contributor Joey Frenette has positions in Canadian National Railway. The Motley Fool recommends Canadian National Railway and Canadian Pacific Kansas City. The Motley Fool has a disclosure policy.

Investing in quality recession-resistant stocks is a proven strategy for building long-term wealth. However, it’s essential to identify a portfolio of companies that generate cash flows across market cycles to benefit from inflation-beating returns over time. In this article, I have shortlisted two such TSX stocks that could help you deliver inflation-beating returns over the next decade.

GFL Environmental stock

GFL Environmental (TSX:GFL), valued at a market cap of $26 billion, is a diversified environmental services company in Canada and the U.S. It offers non-hazardous solid waste management, infrastructure and soil remediation, and liquid waste management services.

Over the last 17 years, the company has grown from a single transfer station to a major industry player, with annual sales approaching the $8 billion milestone.

In Q3 2024, GFL grew its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) by 20% year over year, reporting a record margin of 31.1%, up from 28.1% in the year-ago period.

A widening profit margin enabled GFL to lower balance sheet debt as it ended Q3 with a net leverage ratio of 4.1 times, the lowest in company history.

GFL disclosed plans to sell its Environmental Services business for $6 billion in total after-tax proceeds, most of which will be used to lower long-term debt. Over the years, GFL has focused on offloading non-core services and low-quality revenue businesses.

Moreover, it remains on track to deploy $900 million towards mergers and acquisitions and organic growth. It has already commissioned two new materials recovery facilities in 2024, with two more planned for early 2025. GFL is on track to commission three renewable natural gas plants this year, diversifying its revenue base.

GFL is the fourth largest diversified environmental services company in North America, with operations across 10 Canadian provinces and 25 states in the U.S. Over the years, it has completed more than 250 acquisitions, resulting in strong earnings and revenue growth.

GFL’s stable cash flow generation allows it to pay shareholders an annual dividend of $0.06 per share, which translates to a yield of just 0.1%. However, these payouts have risen by 50% over the last four years.

Waste Connections stock

Valued at a market cap of $49 billion, Waste Connections (TSX:WCN) provides non-hazardous waste collection, transfer, disposal, and resource recovery services in North America. Since its initial public offering in June 2009, the TSX stock has returned close to 1,700% to shareholders in dividend-adjusted gains, comfortably beating the broader market return.

Waste Connections continues to expand steadily, as its core pricing rose by 6.8% year over year in Q3. Its adjusted EBITDA margin widened to 33.7% in Q3 from 32.5% in the year-ago period.

Similar to GFL, Waste Connections has banked on accretive acquisitions for growth. It is on track to end 2024 with a record number of private company acquisitions. In the first 10 months of 2024, it has signed or closed $700 million in annualized private company sales, which includes solid waste franchises, new competitive markets, and waste facilities.

Waste Connections pays shareholders an annual dividend of $1.76 per share, indicating a yield of 0.66%. These payouts have more than tripled over the past decade, significantly enhancing the yield-at-cost.

The post 2 Recession-Resistant Stocks to Close Out 2024 appeared first on The Motley Fool Canada.

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Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Let’s be clear: holding only one stock is generally a bad idea. Diversification is key to reducing risk. Investment experts usually recommend holding a portfolio of at least 20 stocks with minimal correlation to one another. This way, if one stock underperforms, the others may help absorb the losses.

However, in the hypothetical scenario where I could only choose one stock to buy and hold forever, my pick would be the National Bank of Canada (TSX:NA). It’s a stock that has consistently outperformed its peers in the Canadian banking sector, and there are several reasons why it would be my top choice.

National Bank of Canada: A top performer in the sector

When it comes to the big banks in Canada, some investors may dismiss National Bank. It is the smallest of the “Big Six” Canadian banks, but its performance has been anything but small. Over the last decade, National Bank of Canada has consistently outperformed the sector, including over the past year, three years, and five years.

A key reason for this success is the bank’s strong management and focus on the Canadian market. By keeping its business primarily within Canada, National Bank has been able to achieve solid and reliable returns. This focus on the home turf has paid off handsomely, both in stability and profitability.

Stellar returns and dividend growth

National Bank’s impressive growth isn’t just theoretical – it’s tangible. Over the past year alone, the stock has soared by 49%, a stellar performance in any market, especially in the banking sector. Much of this growth can be attributed to its strategic acquisition of Canadian Western Bank, a move that promises significant synergies and accelerated growth.

Looking at the longer term, the numbers are even more impressive. Over the last decade, National Bank delivered annualized returns of over 13%, turning an initial investment of $10,000 into roughly $34,189. If you had reinvested dividends, those returns would have been even better – 15.3% annually, bringing your $10,000 to approximately $41,660. Dividend reinvestment has the potential to amplify returns, especially when the stock is a consistent performer like National Bank.

In fact, this top Canadian bank stock has a solid track record of increasing its dividend, with a compound annual growth rate of 8.9% over the past 10 fiscal years. During periods of economic uncertainty, the bank has kept its dividend steady, showing resilience even in tough times.

Risks and valuation concerns

Like all investments, there are risks involved. One of the primary concerns for National Bank is the integration of Canadian Western Bank, which could bring some short-term challenges. There’s also the matter of valuation – at $140.76 per share at writing, the stock is currently trading at 13.5 times earnings, the highest multiple in the past two decades. A market correction or negative news could cause the stock to pull back.

That said, National Bank’s strong earnings, sustainable dividend, and growth prospects make it a solid long-term pick for anyone looking for a stock to buy and hold.

The Foolish investor takeaway

If I were to invest in only one stock for the long haul, National Bank of Canada would be at the top of my list. It offers impressive returns, a reliable dividend, and a solid management team with a track record of success. While there are always risks involved, National Bank’s resilience and growth potential make it a good investment idea, particularly on meaningful market pullbacks.

The post If I Could Only Buy and Hold a Single Stock, This Would Be It appeared first on The Motley Fool Canada.

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Fool contributor Kay Ng has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Investors planning to generate passive income in 2025 could consider top Canadian stocks with a solid dividend payment and growth history.  Notably, these Canadian dividend stocks are backed by well-established businesses with strong fundamentals and a growing earnings base, enabling them to pay and increase their dividend distributions with each passing year.

With this background, here are three dividend stocks from leading sectors: energy, utilities, and banking. They offer steady passive income potential and the opportunity to diversify your portfolio in 2025.

Top dividend stock from the energy sector

Enbridge (TSX:ENB) is a top Canadian stock offering worry-free passive income. This energy company has consistently rewarded its shareholders with higher dividends. Enbridge transports oil and gas, and benefits from the higher utilization of its extensive liquids pipeline and low-risk growth projects. This enables the company to consistently grow its earnings and distributable cash flow (DCF) and pay higher dividends.

Enbridge has paid dividends for over 69 years and raised them for 29 consecutive years.

Enbridge’s resilient business model, long-term contracts, power-purchase agreements, and cost-of-service framework position it well to grow its earnings and DCF per share and offer higher payouts. Further, its highly diversified revenue stream, multi-billion-dollar capital projects, ongoing investments in its renewable energy portfolio, and growing utility footprint augur well for growth.

Enbridge’s management anticipates its EPS and DCF per share growing by mid-single digits in the long run. This will enable Enbridge to increase its dividend at a similar rate. Besides higher dividends, Enbridge stock offers a compelling yield of about 6.2%.

Top dividend stock from the utility sector

Like energy companies, Canada’s utility companies have a proven track record of solid dividend payouts. One such leading dividend stock from the utility sector is Canadian Utilities (TSX:CU), which can help generate worry-free passive income for investors in 2025.

Canadian Utilities offers gas and electricity services and has an impressive record of dividend growth. Notably, it has raised its dividend for 52 consecutive years, the highest by any Canadian company. This Dividend King also offers a healthy yield of about 5%.

The company’s resilient payouts reflect its ability to consistently generate high-quality earnings. Canadian Utilities’ defensive business model, rate-regulated utility operations, and a growing rate base will likely drive its earnings, supporting its future payouts.

Canadian Utilities continues to invest in regulated utilities, which will likely expand its rate base and boost its earnings. Thanks to low-risk earnings, the company will likely enhance its shareholders’ value through higher payouts in the coming years.

Top dividend stock from the banking sector

Leading Canadian banking stocks are renowned for their consistent dividend distribution. Canada’s top banking companies have paid dividends for over a century. One such leading bank is Toronto-Dominion Bank (TSX:TD), which stands out for its impressive dividend growth and regular payments.

Toronto-Dominion Bank has continuously paid dividends for 167 years. Moreover, its dividend has increased at a CAGR of 10% since 1998, making it a reliable dividend stock for generating passive income.

Toronto-Dominion Bank’s diversified revenue stream, ability to grow loans and deposits, and operating efficiency will continue to fuel its earnings and dividend payments. Further, its solid balance sheet and accretive acquisitions bode well for future growth.

This Canadian banking giant also maintains a conservative dividend payout ratio of 40–50%, which is sustainable in the long term. Moreover, it offers a compelling yield of 5.2% near the current market price.

The post Top Canadian Stocks to Generate Passive Income in 2025 appeared first on The Motley Fool Canada.

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Fool contributor Sneha Nahata has no position in any of the stocks mentioned. The Motley Fool recommends Enbridge. The Motley Fool has a disclosure policy.