The Tax-Free Savings Account (TFSA) has developed into the most popular registered account, largely due to its potential as a growth vehicle. However, it is also underrated as a passive-income generator. When you snatch up the right dividend stocks in your TFSA, you can count on consistent income that will be 100% tax free. That is worth getting excited about. Today, I want to discuss how you can generate over $450/month in tax-free passive income going forward. In our hypothetical, we will be using all the cumulative contribution room in our TFSA. Let’s dive in.
This energy stock provides a big punch for your passive-income portfolio
Energy stocks had a fantastic first half in 2022, bolstering the energy-heavy Canadian markets. However, oil and gas prices have softened since the beginning of the summer. That does not mean investors should turn from equities like Keyera (TSX:KEY). This energy stock can be a great source of passive income going forward.
The company reported adjusted EBITDA of $257 million in the first quarter of 2022 — up from $225 million in the previous year. Net earnings rose to $114 million compared to $86 million in the first quarter of 2021.
Keyera closed at $29.57 per share on July 13. In our hypothetical, we will look to snatch up 920 shares of Keyera at this share price for a total of $27,204. The stock offers a monthly dividend of $0.16 per share. That represents a tasty 6.4% yield. This investment will let us generate monthly passive income of $147.20 in the months to come.
Here’s another dividend stock to stash in your TFSA
Superior Plus (TSX:SPB) is a Toronto-based company that is engaged in the energy-distribution business. Its shares have dropped 14% in the year-to-date period. The stock is down 26% year over year.
In Q1 2022, the company delivered adjusted EBITDA growth of 18% to $250 million. It bolstered its adjusted EBITDA guidance range in response to this positive report.
This dividend stock closed at $11.25 per share on July 13. We have the room to snatch up 2,410 shares of Superior Plus for a total purchase price of $27,112. This stock currently offers a monthly distribution of $0.06 per share, representing a 6.4% yield. That means we can churn out monthly passive income of $144.60 going forward.
One more energy stock to round out your passive-income generation
Freehold Royalties (TSX:FRU) is the third dividend stock I’d look to stash to build your passive-income portfolio. This Calgary-based oil and gas royalty company is focused on generating consistent income for its shareholders. Shares of Freehold have increased marginally in 2022.
This stock closed at $12.56 on July 13. We can buy 2,160 shares of Freehold for a total purchase price of $27,129. Freehold offers a monthly dividend of $0.08 per share. That represents a monster 7.6% yield. We can now generate monthly passive income of $172.80.
Conclusion
These investments will allow us to generate tax-free passive income of $464.80 on a monthly basis.
