If you're looking for a relatively safe investment to put into your tax-free savings account (TFSA), a good option to start with is looking at dividend stocks. Dividend stocks can generate some recurring income for your portfolio and by and large they are safer than average stocks because their underlying businesses are doing well enough to justify making recurring payments.
One way to lessen your risk even further is by investing in dividend stocks with strong track records. The iShares S&P/TSX Canadian Dividend Aristocrats Index ETF (TSX:CDZ) provides investors with just that, as it contains the best and safest dividend stocks on the TSX. It includes big names such as pipeline company Enbridge (TSX:ENB)(NYSE:ENB), telecom giant BCE (TSX:BCE)(NYSE:BCE), and top bank Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM). As of Oct. 20, the fund had 93 holdings in its portfolio.
Its yield over the trailing 12 months is 3.9% and it has a management expense ratio of 0.66%. Investors are getting good value for their money with the ETF as the stocks within it average a price-to-earnings multiple of just 12, and a price-to-book multiple of 1.6. The fund's focus is on Canadian companies that have increased their dividend payments for at least five straight years.
The ETF also offers some solid diversification with a good cross-section of industries included within its portfolio. Financials account for just under one-quarter of the ETF's holdings, followed by energy stocks at 15%, utilities and real estate are each at around 11%, and industrials come in at just under 10%.
If you're looking for a safe stock to put in your TFSA, the Canadian Dividend Aristocrats ETF can be a great option today.
