Passive-Income Investing: How to Churn Out Over $460/Month TAX FREE!

Canadians should look to churn out big passive income with stocks like Freehold Royalties Ltd. (TSX:FRU) in the middle of July.

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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.

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 Ambrose O'Callaghan has no position in any of the stocks mentioned. The Motley Fool recommends FREEHOLD ROYALTIES LTD., KEYERA CORP, and SUPERIOR PLUS CORP.

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