Tax-Free Stock Market Dividends: Build Retirement Revenue

More Canadians self-invest in the stock market by buying monthly dividend stocks like Pizza Pizza Royalty Corp. (TSX:PZA) for extra tax-free retirement income.

Many Canadians don’t want to take charge of their own retirement because they’re too afraid of losing their money to self-manage stock market decisions in their Tax-Free Savings Accounts (TFSA) and Registered Retirement Savings Plans (RRSPs).

If you aspire to one day retire, you need to gain the confidence to choose your stock market investments. It isn’t as difficult as you may believe, however. Every Canadian can learn how to make wise investments in the Toronto Stock Exchange.

The popularity of the internet has quickened the exchange of information, making it easier for all Canadian citizens to research stocks to buy.

Millennials are using the internet to make sound financial decisions. Even Canadian pensioners and retirees can learn to identify safe, dividend stocks for their TFSAs and RRSPs.

Pizza Pizza Royalty Corp (TSX: PZA) is a monthly dividend-payer with growing earnings and revenue. Market participants have undervalued the stock at $9.47 per share. A Canadian saver without a lot of cash to spend could easily pick up 100 shares of Pizza Pizza Royalty Corp for only $947.

Profitable stocks are perfect for RRSPs

Registered Retirement Savings Plans require discipline to manage profitably. Canadian investors should watch that they don’t buy stock in too many risky positions, which is why Canadian investors must research the profitability of the company before making a purchase.

Pizza Pizza Royalty brings in an earnings per share (EPS) of $0.85. Canadian investors want to find stocks with positive earnings per share. If the management reports a negative EPS, the investment likely carries more risk.

The trailing 12 months levered free cash flow (FCF) reported by Pizza Pizza Royalty is positive at $21 million. Positive levered free cash flow is a sign that the company’s debt payments are not reducing shareholder returns too much. If you stick to purchasing stocks with a positive FCF, you’ll make more high-quality investments.

Tax-free dividends are a fantastic income source

Canadian retirees can either reinvest dividends to increase the value of their retirement accounts or consider dividends a supplement to pension income, which is why dividend stocks are such an excellent investment for a TFSA or RRSP.

As long as the stock is cheap with a stable price history, dividends can be a liquid, tax-free source of revenue during retirement.

Many monthly dividend stocks like Pizza Pizza Royalty give retirees a consistent stream of income at high yields. Pizza Royalty last issued a dividend of $0.071 per share in November at a trailing annual dividend yield of 8.93%. A 100-share position amounts to an extra $7 per month and $84 per year.

It’s difficult to beat this monthly dividend payment. Even a high-yield savings account will not give you an equal income for the same initial investment.

If you plan on making a long-term stock purchase, Pizza Pizza Royalty is a profitable dividend payer and an outstanding addition to any TFSA or RRSP.

The stock market is accessible to research

Canadians can find plenty of information online about the stock market to make sound investment decisions. The internet has opened up many doors. In growing numbers, Canadians are steadily becoming more active in the stock market and are self-managing their long-term savings.

The Canada Revenue Agency provides substantial, easy-to-understand information on rules surrounding tax-free investing in a TFSA or RRSP.

If you haven’t already begun self-managing your retirement portfolio, there’s no better time like the present to jump on board the journey to self-reliance and tax-free investment returns.

Fool contributor Debra Ray has no position in any of the stocks mentioned. The Motley Fool owns shares of PIZZA PIZZA ROYALTY CORP.

More on Dividend Stocks

concept of growth
Dividend Stocks

The Dividend Stock I’d Never Sell, Even in a Downturn

Fortis is a dividend stock I'd hold through a downturn. Its regulated utilities and dividend growth support a patient approach…

Read more »

frustrated shopper at grocery store
Dividend Stocks

2 Dividend Stocks Retirees Can Count on for Decades

These two Canadian dividend stocks offer a great mix of essential businesses, regular dividends, and long-term growth investments that could…

Read more »

customer comparison shops in liquor store
Dividend Stocks

How Much TFSA Income Triggers an OAS Clawback?

The OAS clawback is based on net world income, with a 2025 minimum recovery threshold of $93,454, not on a…

Read more »

ETF is short for exchange traded fund, a popular investment choice for Canadians
Dividend Stocks

Create a Set-And-Forget Portfolio With Just 3 ETFs

Build a set-and-forget portfolio with VCN, XUU, and XEF, three ETFs offering broad exposure to Canadian, U.S., and international stocks.

Read more »

voice-recognition-talking-to-a-smartphone
Dividend Stocks

1 Canadian Dividend Stock Down 22% I’d Buy Right Now

The Canadian dividend stock has witnessed a notable pullback, creating a buying opportunity for investors looking for steady income.

Read more »

Colored pins on calendar showing a month
Dividend Stocks

How to Build a Canadian Portfolio That Pays You Monthly

If you like monthly income, this mix of five real estate, industrials, and energy stocks can pay you attractive monthly…

Read more »

Concept of rent, search, purchase real estate, REIT
Dividend Stocks

The Best Monthly-Paying Dividend Stock on the TSX Right Now

This monthly dividend stock offers an attractive mix of nearly 5% yield, monthly distributions, and a deeply discounted unit price…

Read more »

Warning sign with the text "Trade war" in front of container ship
Dividend Stocks

The Trade War Is Raising Prices Again: This Canadian Grocer Can Protect Its Margins

Trade tensions can raise specific retail costs even when overall grocery inflation is slowing, putting purchasing scale at a premium.

Read more »