There are many attractive income-generating options for investors to consider that go beyond equities, which can prove to be risky holdings. For Canadian investors looking to add stability and dependable income to their tax-free savings account (TFSA), a fixed-income solution might be the answer.
One strong candidate to consider is the Invesco Canadian Core Plus Bond ETF (TSX:ICCB). This fund provides an attractive distribution yield of approximately 4.1%, offering a compelling alternative at a time when many equities are trading at high valuations. It aims to generate both income and capital growth by primarily investing in investment-grade debt securities.
The fund’s portfolio managers conduct deep research to identify bonds across various maturities that present strong fundamental value relative to their risk and credit ratings. While it largely focuses on Canadian dollar-denominated securities, it does not merely mirror a benchmark index, giving it the flexibility to seek out the best opportunities.
Historically, this has been a low-volatility investment and since the start of the year, it is down a modest 2%. Investors shouldn't expect significant movements from this investment, but it can be highly valuable for the dividend income it generates. The fund has a management fee of 0.45%.
A major advantage for income-focused TFSA investors is that the Invesco Canadian Core Plus Bond ETF distributes payments monthly. This frequent payout schedule provides a steady stream of cash flow that can be seamlessly reinvested or utilized for other needs, all while enjoying the tax-sheltered benefits of a TFSA. With a focus on capital preservation and a robust yield, this ETF stands out as a prudent, low-volatility addition to your portfolio.
