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The 2022 Tax-Free Savings Account (TFSA) annual limit is $6,000, unchanged in the last three years. For Canadians who have never contributed since the TFSA was introduced in 2009 but are eligible, the accumulated contribution room will rise to $81,500.
Rising inflation due to supply chain disruptions is the biggest concern of the Bank of Canada this year-end. The Feds will have to renege on its promise to freeze the current interest rate until 2023. Meanwhile, economists agree the situation won’t be transitory.
TFSA users should welcome the new limit or increase for 2022. They have the opportunity to pad balances and earn more to counter or cope with inflation. Many account holders will likewise maximize their TFSAs for tax-savings purposes. If you want more financial cushion next year, three stocks are the best options.
Timely dividend increase
Sun Life Financial (TSX:SLF)(NYSE:SLF) should appeal to TFSA investors, because of the recent 20% increase in dividend payments. The $40.88 billion, federally regulated financial institution did not waste time; it rewarded shareholders following the lifting of the ban on dividend hikes.
Kevin Strain, SLF president and CEO, said in an interview, “We’re quite happy to provide that stimulus and those dividend cheques back to our shareholders.” He added, “We thought that raising the dividend and doing it as quickly as we could was important.”
On a year-to-date basis, the insurance stock is up 26.08%. SLF trades at $68.91 per share and pays a 3.78% dividend. The current payout ratio is 35.9%, but management will bring it up to between 40% to 50%.
TFI International (TSX:TFII)(NYSE:TFII) should be among the must-buy stocks in 2022. The $13.17 billion company provides transportation and logistics services to clients in Canada, Mexico, and the United States. Total revenue in Q3 2021 increased 123.7% to US$2 billion versus Q3 2020. The year-over-year growth in adjusted net income was 58.9%.
According to Alain Bédard, TFI’s chairman, president, and CEO, there was robust cash flow during the quarter. He added that all TFI’s business segments surpassed their pre-pandemic performance, notwithstanding the ongoing macro disruptions. Bédard also said the company has yet to reap the benefits from newly acquired UPS Freight fully.
The good news to investors is the 17% increase in quarterly dividends effective January 2022. On the TSX, the industrial stock is up 120.5% year to date. The share price is $143.36, while the dividend yield is 0.79% if you invest today.
Growing cash flows
On November 26, 2021, TSX’s energy sector declined 5.86% following the 10% drop in oil prices. Cenovus Energy (TSX:CVE)(NYSE:CVE) fell by almost the same percentage, but at $15.61 per share, the year-to-date gain remains high at 102.36%. Also, the energy stock now pays a modest 0.85% dividend.
The $32.65 billion integrated energy company reported solid operating and financial performance in Q3 2021. Because of the total upstream production of nearly 805,000 barrels of oil equivalent per day (BOE/d), cash from operating activities reached $2.1 billion. Moreover, the net income of $551 million during the quarter was almost double compared to Q2 2021.
TFSA users need to optimize their annual contributions next year for added financial cushion. Furthermore, all earnings or gains inside the account are tax-free.