There’s no question that one of the smartest financial moves you can make is opening a Tax-Free Savings Account (TFSA) as soon as you turn 18, or as early as possible. The TFSA is one of the most powerful tools for saving money, investing in stocks, and building long-term wealth.
Taxes are one of the biggest obstacles when it comes to growing and compounding your money over several years. So, the fact that you can invest substantial cash in your TFSA and pay no taxes on any of the gains you make is a massive opportunity.
The key to maximizing that opportunity, though, is finding the right investments that can consistently grow and compound inside it for years.
So, although you want a solid balance in your portfolio, and growth stocks can definitely help build long-term wealth, some of the best and most reliable growth in your TFSA often comes from steady, dependable dividend stocks.
When you generate passive income every month or quarter, all of that cash can be used to buy more shares or new stocks in order to accelerate the compounding effect. And when you find one that’s consistent, predictable, and offers an above-average yield, such as Pizza Pizza Royalty Corp (TSX: PZA), it can be the perfect stock to buy for your TFSA.
So, if you’re looking to boost the passive income your TFSA generates, here’s why Pizza Pizza is one of the best stocks to buy now.
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A simple business model that works
The first reason Pizza Pizza is a perfect stock for many Canadians’ TFSAs is that it’s a simple business anyone can understand.
Pizza Pizza isn’t your typical restaurant stock. Instead of owning and operating its own locations, the company collects a royalty on sales generated by Pizza Pizza and Pizza 73 restaurants across Canada.
This model makes the business much more predictable for investors. It earns a steady stream of cash from every item sold, without having to worry about the profitability of each individual location. Plus, overall sales across the country don’t tend to fluctuate much from year to year.
That not only makes the business easy to follow, but also makes it an ideal dividend stock to buy in your TFSA because its cash flow is so predictable.
And since Pizza Pizza is well-known by Canadians as one of the most convenient and affordable fast-food options, demand has proven incredibly resilient through both good and bad economic times.
Another key advantage is the size and scale of its footprint. With hundreds of locations nationwide, Pizza Pizza is one of the most recognized brands in the country.
On top of that, because it’s a royalty company, the business has an asset-light structure with minimal debt. That means nearly all the royalties it generates each month flow straight to investors through dividends, after only minimal expenses and taxes.
For example, in 2024, Pizza Pizza generated $39.8 million in total sales and returned $33.6 million to investors through dividends, showing exactly why it’s one of the best Canadian dividend stocks to consider buying for your TFSA.
Long-term growth potential makes Pizza Pizza the perfect TFSA stock
The fact that Pizza Pizza has such a low-risk and predictable business model makes it a great dividend stock. What makes it an excellent dividend stock is that, in addition to the resiliency it offers, Pizza Pizza is also looking to continue growing its operations and consequently its dividend.
Not only does it constantly find ways to innovate and improve its menu offerings and drive more sales with its app and digital offerings, but Pizza Pizza has also been expanding internationally, which could provide a significant runway for future growth. The company’s goal is to eventually open 10 new stores a year in Mexico.
Finally, on top of the fact that it offers an attractive 5.9% dividend yield, Pizza Pizza also returns cash to investors monthly, allowing you to reinvest your returns even sooner.
So, if you’re looking for top Canadian dividend stocks to buy for your TFSA, Pizza Pizza is undoubtedly one you’ll want to check out.
