TFSA Investors: 1 Passive Income Stock for Thousands in Annual Cash

TFSA investors seeking passive income know to go to dividend stocks, however this one is superior to the rest due to monthly payments and solid growth.

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Passive income stocks is one of the first places Motley Fool investors can look when they open up a Tax-Free Savings Account (TFSA). It’s easy to see why. During this volatile market, these dividend stocks pay out no matter what. As long as you choose the right one.

But that’s the key, isn’t it? Motley Fool investors need the right passive income stock to ensure they continue to see payments, as well as growth in their returns. With that in mind, today I’m going to go over one of these dividend stocks I’d recommend above the rest.

A solid passive income stream

Real estate stocks used to be the best place to look for passive income. And while that’s not false today, it’s a little trickier. The pandemic threw a wrench in just about everything, including real estate. Well, almost all real estate.

One real estate area that remained strong was the health care industry. If you owned a hospital, office building for health care workers, or anything else under this category, there was simply no chance you were closing. No matter what.

This meant the industry could keep charging rents and bringing in patients. Furthermore, it meant there was a need to invest in these services with the growing needs from the pandemic. Therefore, health care real estate turned out to be one of the best places to look for passive income stocks.

Only one I’d consider

In Canada, there’s really only one passive income stock I’d consider in the health care real estate industry. That’s NorthWest Healthcare Properties REIT (TSX:NWH.UN). The company continues to report record growth even now when the pandemic is easing restrictions. This comes from the company’s solid lease agreements, giving it the ability to bring in cash and make solid acquisitions.

The passive income stock bought up more property in the Netherlands last year, along with an Australian health care real estate investment trust. This allowed it to bring in record revenue. Furthermore, lower interest rates led to an increase in renewed lease agreements. It now has an average lease agreement of around 14 years! That’s some stable income.

Bring in thousands

But of course, Motley Fool investors are here for passive income information. For NorthWest stock, it provides a dividend of 5.72% as of writing, or $0.80 per share per year. Furthermore, it’s a steal trading at 7.13 times earnings as of writing.

The passive income stock provides monthly income for its investors, and it’s quite possible to bring in thousands each year. If you had $50,000 to invest today, that could generate $2,877 in dividends each year. That would mean bringing in about $240 starting next month!

Furthermore, shares continue to rise at a steady pace. Shares rose 8% in the last year, and 32% in the last five years. While it’s not crazy growth, it’s remained steady, climbing back from the March 2020 crash and continuing upwards.

Foolish takeaway

The best part of all this is if Motley Fool investors choose to put NorthWest stock in their TFSA, they can bring in this passive income tax-free. Plus, it currently offers a compound annual growth rate of 7% for its share growth, although analysts have a higher target price of $15.29 as of writing. So investors can look forward to dividends and growth from this stock no matter what happens in the world.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe owns NORTHWEST HEALTHCARE PPTYS REIT UNITS. The Motley Fool recommends NORTHWEST HEALTHCARE PPTYS REIT UNITS.

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