14-05-2025
How I'd Use $10,000 to Transform My TFSA Into a Cash-Pumping Portfolio
Written by Amy Legate-Wolfe at The Motley Fool Canada
Turning a Tax-Free Savings Account (TFSA) into a reliable income stream doesn't have to involve complex strategies or risky picks. Sometimes, it just takes a solid stock, a smart investment, and a bit of patience. If I had $10,000 to put to work in my TFSA right now, Chorus Aviation (TSX:CHR) would be high on my list. It's not a flashy tech stock, but it's got everything you want when aiming to generate consistent, long-term cash flow, growth potential, improving earnings, and a management team that knows how to reward shareholders.
Chorus Aviation is based in Halifax and operates several businesses that support regional aviation. Its best-known subsidiary is Jazz Aviation, which flies regional routes under the Air Canada Express brand. Chorus also owns Voyageur Aviation, which offers aircraft maintenance and special mission solutions. This means Chorus doesn't just make money by flying passengers. It earns revenue from maintenance contracts, parts support, and fleet services. It's a business model built around aviation resilience, not just ticket sales.
The company's first-quarter 2025 results prove just how well it's executing that strategy. Chorus reported a net income of $18.9 million, which is a huge jump from the $12.3 million it posted in the same quarter last year. More importantly for investors, the adjusted earnings available to common shareholders rose to $15.4 million, or $0.57 per share, compared to just $0.13 per share a year ago. That's the kind of earnings growth that shows the business is not just recovering; it's hitting a new gear.
Chorus also delivered strong adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $56.9 million for the quarter, up from $54 million in the same period last year. EBITDA might not be the flashiest number in finance, but it tells you how much money a company is making from its actual operations before taxes, interest, and other stuff that can skew the picture. This steady growth shows Chorus has a healthy and stable core business.
What really makes Chorus attractive for a TFSA, though, is the free cash flow. In the first quarter (Q1) of 2025, the company generated $40.6 million in free cash flow, up from $30.7 million the year before. This is the money left over after capital expenses, and it's the pool of cash Chorus can use to pay down debt, buy back shares, or reward investors in other ways. In today's market, a company generating this much excess cash deserves a second look.
And Chorus isn't just sitting on that money; it's putting it to work. In April 2025, the company launched a $25 million substantial issuer bid, essentially offering to buy back a chunk of its own stock. On top of that, since 2022, it has repurchased $53 million in shares through its normal course issuer bid program. That's a clear signal from management that they believe the stock is undervalued and that it's committed to delivering value to shareholders. For investors using a TFSA, this can be a powerful way to boost long-term returns without worrying about capital gains tax.
Chorus also has a strong balance sheet, with a market cap of about $505 million. Its stock has a fair bit of room to run if investor sentiment improves to reach 52-week highs. As travel rebounds and aviation services remain in demand, Chorus could see more tailwinds pushing it forward.
For TFSA investors who want a cash-generating machine that doesn't rely on hype, Chorus is worth serious consideration. It's generating strong earnings, increasing free cash flow, and actively buying back shares to return value. That's the kind of stock you can hold through market cycles and let your tax-free gains compound over time. Putting $10,000 into Chorus in your TFSA might not make headlines, but it could quietly deliver some very rewarding returns. When you're building wealth for the long term, being boring and dependable is often the best kind of exciting.
The post How I'd Use $10,000 to Transform My TFSA Into a Cash-Pumping Portfolio appeared first on The Motley Fool Canada.
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Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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