The Motley Fool

Passive-Income Investing: Make Over $120/Week and Never Work

Image source: Getty Images

When this year started, I’d explained why the consistent creation of passive income was a huge milestone for an investor. There are myriad ways an individual can collect passive income. If you can find a way to build up passive-income streams over time, you may never have to work again. Today, I want to discuss how this strategy can set you up for the future and give you some starter stocks to stash in a TFSA. Let’s jump in.

Why passive-income investing can set you up for life

As I’d explained in the article linked above, there are many ways to collect passive income. Generating royalties through a published book or other creative endeavour, collecting rental income through real estate properties, starting a digital store through a platform like Shopify, and, of course, producing investment income. If you set up multiple successful passive-income streams, you may never have to work a day in your life again.

For passive-income generation through investments, I like a Tax-Free Savings Account (TFSA) to start. Why? Because you pay no tax on income generated in a TFSA. That is a luxury you will not be afforded through other passive-income processes.

Stash high-yield REITs in a TFSA

Real estate investment trusts (REITs) have had a challenging 2020. However, these vehicles still offer attractive income generation. We just need to target the right REITs to set us up for the future.

Inovalis REIT (TSX:INO.UN) is an open-ended REIT that consists of properties that are used for the rental of office space leased to corporate clients in urban areas. The COVID-19 pandemic has put huge pressure on commercial real estate. However, the hope of a vaccine in early 2021 could see employees return to their offices sooner rather than later. Shares of Inovalis have climbed 8.6% month over month.

This office-focused REIT last had a price-to-earnings (P/E) ratio of 4.3 and a price-to-book (P/B) value of 0.6. That puts Inovalis in very attractive value territory. Best of all, Inovalis offers a monthly distribution of $0.069 per share. This represents a monster 9.6% yield.

Slate Grocery REIT is another solid option for passive-income investors who want exposure to the grocery space through a REIT. Grocery retailers have been extremely resilient during this crisis due to their role as an essential service. Its stock has increased 12% over the past month. This REIT last paid out a monthly distribution of $0.072 per share, representing a huge 9.3% yield.

One more dividend stock to shore up the start of your passive-income empire

Beyond REITs, there are also enticing high-yield dividend stocks in the energy space. This is another area for passive-income investors to target. Keyera (TSX:KEY) is engaged in the energy infrastructure business in Canada. Its shares have dropped 29% in 2020. Keyera stock boasts a favourable P/B value of 1.6.

This energy stock last paid out a monthly dividend of $0.16 per share. That represents a tasty 8.5% yield. With that in mind, let’s carve out our hypothetical.

Inovalis last closed at $8.56 per share. We will purchase 2,685 shares of Inovalis, which is worth just under $23,000. Those shares will pay out a total of $185.26 per month. Slate Grocery last closed at $12.16. We will purchase 1,890 shares of Slate, again worth just under $23,000. This will pay us $136.08 per month. Finally, Keyera last closed at $22.37 a share. A purchase of 1,030 shares works out to just over $23,000. Those shares will pay out $164.80/month in dividend income.

In this hypothetical, we could churn out over $120/week in tax-free income. That is a great start for those looking to start their passive-income empire.

Just Released! 5 Stocks Under $49 (FREE REPORT)

Motley Fool Canada's market-beating team has just released a brand-new FREE report revealing 5 "dirt cheap" stocks that you can buy today for under $49 a share.
Our team thinks these 5 stocks are critically undervalued, but more importantly, could potentially make Canadian investors who act quickly a fortune.
Don't miss out! Simply click the link below to grab your free copy and discover all 5 of these stocks now.

Claim your FREE 5-stock report now!

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned. The Motley Fool recommends Inovalis REIT and KEYERA CORP.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.

I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls. I understand I can unsubscribe from these updates at any time. Please read the Privacy Statement and Terms of Service for more information.