Passive-Income Power: How to Make Over $485/Month TAX FREE Starting Now!

Canadians battling high inflation may want to churn out big passive income in their TFSA with stocks like Bird Construction Inc. (TSX:BDT).

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 July 23, 2022 10:00 am EDT

The Bank of Canada (BoC) recently revealed that inflation was expected to hit above 8% and stay there for several months. That means that Canadian consumers will be forced to navigate challenging financial conditions this summer and likely into the fall. This is a good time to consider building a portfolio that can provide consistent passive income. Better yet, you can generate income in a Tax-Free Savings Account (TFSA) that allows you to churn out tax-free dividends.

Today, I want to discuss how you can make $485/month in tax-free passive income starting today. In this scenario, we are going to be using all our $81,500 in TFSA room. Let’s jump in.

This dividend stock offers nice value and a big yield

First National (TSX: FN) is a Toronto-based company that originates, underwrites, and services commercial and residential mortgages in Canada. Shares of this dividend stock have dropped 15% in 2022 as of close on July 18. The stock is down 25% from the previous year.

Investors can expect to see the company’s second-quarter 2022 results on July 27. In Q1 2022, First National saw mortgages under administration (MUA) increase 4% to $124 billion. Meanwhile, revenues also rose 4% to $350 million. The company has challenges on the horizon as the North American real estate market is set to face rising interest rates.

This dividend stock closed at $36.16 per share on July 18. In this hypothetical, we can snatch up 750 shares of First National in our TFSA for a total purchase price of $27,120. The stock offers a monthly dividend of $0.196 per share, which represents a tasty 6.5% yield. This investment means we can generate monthly passive income of $147 in our TFSA.

Here’s a REIT that offers nice monthly passive income

True North REIT (TSX: TNT.UN) is a Toronto-based real estate investment trust (REIT) that is focused on investing in commercial properties across Canada. Shares of this REIT have plunged 13% so far in 2022. That has pushed the stock into negative territory in the year-over-year period.

In Q1 2022, the REIT was able to collect about 99.5% of its contractual rent. Better yet, it delivered revenue and operating income growth of 4% and 5%, respectively, from the previous year.

The REIT closed at $6.44 per share on July 18. In our scenario, we can buy a whopping 4,220 shares of the True North REIT for a total purchase price of $27,176. It last paid out a monthly dividend of $0.05 per share. That represents a monster 9.2% yield. These holdings will allow us to churn out tax-free monthly passive income of $211.

One more dividend stock to round out your passive-income portfolio

Bird Construction (TSX: BDT) is the third dividend stock I’d look to snatch up to bolster your passive-income portfolio today. This Mississauga-based company operates as a general contractor. Its shares have plunged 29% so far in 2022.

This stock closed at $6.95 per share on July 18. For our final purchase, we’ll snag 3,910 shares of Bird for a total price of $27,174. It offers a monthly distribution of $0.033 per share. That represents a strong 5.6% yield. This means we can make monthly passive income of $128 in our hypothetical TFSA.