Passive-Income Investing: How to Earn $16/Day TAX FREE in Your Sleep

Canadians may want to seek out passive income with stocks like Keyera Corp. (TSX:KEY), as volatility picks up in early 2022.

Ambrose O'Callaghan

Ambrose O'Callaghan graduated with a BA in Political Science from McMaster University. After that, he jumped into the banking world. He worked from the front line to an investment associate role. After that, he found a way to marry his experience and knowledge in the world of banking and finance to his love and passion for writing. Ambrose is a passionate believer in Warren Buffett's value investing model.

Published January 29, 2022 10:00 am EST

North American markets have been hit hard by volatility in the first month of 2022. In this environment, Canadian investors may be on the lookout for passive income. Today, I want to discuss a hypothetical that will see us use all the room in a TFSA to generate passive income going forward. The cumulative contribution room in a TFSA rose to $81,500 in 2022. In this piece, I’ll look at three dividend stocks that could deliver big income for investors.

money while you sleep — Image source: Getty Images

TFSA investors should hold this energy stock for its income generation

Keyera (TSX: KEY) is a Calgary-based company that is engaged in the energy infrastructure business in Canada. Energy stocks have benefited from the bull market in oil and gas prices over the past year. Shares of this energy stock have climbed 17% year over year as of close on January 26.

This stock closed at $28.21 on January 26. It is still trading in favourable value territory compared to its industry peers.

Passive-income investors can look to snatch up 930 shares of Keyera for a purchase price of $27,799.50 in our hypothetical. Keyera last paid out a monthly dividend of $0.16 per share. That represents a 6.8% yield. Those 930 shares will net us $148.80/month in passive income. That works out to $4.89 per day.

Here’s another passive-income monster to snatch up today

Canoe EIT Income Fund (TSX: EIT.UN) a closed-end balanced fund that is managed by Canoe Financial LP. Shares of this income fund have increased 28% in the year-over-year period. This is one of the monster passive-income vehicles that Canadian investors should look to target in late January.

The income fund closed at $12.96 per share on January 26. We can purchase 2,100 shares of this income fund in our hypothetical. That works out to a purchase price of $27,216. This stock currently offers a monthly dividend of $0.10 per share. That represents a monster 9.2% yield.

Our 2,100 shares in the Canoe EIT Income Fund will allow us to churn out monthly income of $210. Moreover, we can count on an average daily income of $6.90 in our TFSA.

One more dividend stock to complete our hypothetical

Sienna Senior Living (TSX: SIA) is a Markham-based company that provides senior living and long-term care (LTC) services in Canada. This dividend stock has dropped 7.2% in 2022 as of close on January 26. Its shares are still up 6.3% in the year-over-year period.

The stock closed at $14.14 per share on January 26. Passive-income investors can look to snatch up 1,930 shares of Sienna for a purchase price of $27,290.20 in this scenario. Sienna currently offers a monthly dividend of $0.078 per share. That represents a 6.6% yield.

Those shares will allow us to generate $150.54 in monthly income in a TFSA. That works out to $4.94/day in passive income.

Bottom line

These investments in our TFSA will allow us to generate a total of $16.73 per day in tax-free passive income. That is a solid starting point in a year that has gotten off to a rocky beginning.