Retirement investors and other TFSA investors can purchase famous TSX dividend stocks at discount pricing due to the market correction.

The Canada Revenue Agency cannot access dividends or capital gains from a TFSA. That’s crucial for investors who don’t want dividend income to push them into a higher tax rate.

In 2022, the TFSA contribution limits increased by $6,000, reaching a maximum of $81,500. That is sufficient to create a sizable and consistent passive income stream from a stock-balanced portfolio. Let’s examine two that should be on your radar.

Bank of Nova Scotia

At the time of writing, Bank of Nova Scotia’s (TSX:BNS) share price is hovering around $65. The stock reached its peak earlier this year at $95. This is a significant reduction in a short period for a reputable bank that is still quite profitable and keeps increasing its dividend. Bank of Nova Scotia raised the payout by 11% around the end of last year and an additional 3% when it announced its fiscal second quarter (Q2) 2022 results.

All Canadian banks will experience slower revenue growth in 2023 or 2024 due to a foreseeable recession. Customers spend more of their extra cash or savings to purchase necessities. That will hurt firms and eventually cause them to invest less in expansion. Unemployment is probably going to rise when the hot job market cools off. Rate increases by the Bank of Canada are already impacting the housing market, and the sharp rise in mortgage rates could result in a worse decline in home values than initially anticipated.

Bank of Nova Scotia seems oversold despite the headwinds. The company is very well at handling the downturn, and the stock looks cheap at 7.8 times trailing 12-month profits. Investors who purchase now will receive a respectable dividend yield of 6.3% while waiting for the upswing.

TC Energy

In comparison to $74 in June, the share price of TC Energy (TSX:TRP) is currently about $58. The stock price fell along with the overall energy market decline, but the harm seems greatly exaggerated. There is no oil or natural gas produced by TC Energy. The business merely transports the goods from the producers to storage facilities, refineries, or utilities and bills customers for the service.

It is anticipated that demand for oil and natural gas produced in North America will rise in the upcoming years. TC Energy is well-positioned to profit from the trend with its enormous networks of pipelines and storage facilities in Canada, the United States, and Mexico.

To link natural gas producers to a brand-new liquefied natural gas (LNG) facility on the coast of British Columbia, TC Energy is developing the Coastal GasLink pipeline. The network of TC Energy in the United States links American producers to LNG plants on the Gulf Coast, which transport the fuel to overseas customers.

Investors who buy the stock at the current level can get a 6.2% dividend yield.

Bottom line:

Top stocks offering attractive dividends that should increase in the future include TC Energy and Bank of Nova Scotia. Investors can now quickly obtain an average yield of 6% by constructing a diversified portfolio of top dividend stocks from diverse industries. An investment of $80,000 in TFSAs, would produce $4,800 in annual income. That comes to $400 each month.

More reading

• 2 Cheap Banking Stocks to Buy Now and Never Sell
• Want $1,000 in Passive Income? Buy This Many Shares of a Certain TSX Stock
• 3 Cheap Financial Stocks to Buy Now and Never Sell
• TFSA Passive Income: How to Earn $380 Per Month Tax Free for Life
• The Smartest TSX Dividend Stocks to Buy With $400 Right Now