The Tax-Free Savings Account (TFSA) has become the favoured registered investment vehicle among Canadians since its inception in January 2009. One of the greatest qualities of the TFSA, besides the obvious tax-free gains break it offers, is its flexibility. On one hand, you can pursue a growth-oriented strategy that is very rewarding when you can pocket those monster gains. However, Canadians can also commit to an income-oriented investment strategy.
Today, we are going to explore this strategy and generate passive income with $40,000 we have available in our TFSA. Let’s jump in.
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This energy stock can churn out big passive income in your TFSA
Keyera (TSX: KEY) is a Calgary-based company that is engaged in the energy infrastructure business in Canada. Shares of this energy stock have climbed marginally in the year-to-date period. The stock is down 4.8% in the year-over-year period.
This company released its third-quarter (Q3) fiscal 2022 earnings on November 9. Keyera delivered net earnings of $123 million, or $0.56 per share — up from $70 million, or $0.32 per share, in the prior year. Meanwhile, it finished out the third quarter in a much-improved liquidity position.
Shares of Keyera closed at $28.91 on November 14. In this scenario, we can snatch up 460 shares for a purchase price of $13,298.60. This energy stock offers a monthly dividend of $0.16 per share. That represents a tasty 6.6% yield. TFSA investors can now generate monthly passive income of $73.60 going forward.
Don’t sleep on this monster passive-income stock in 2022
Timbercreek Financial (TSX: TF) is a Toronto-based mortgage investment company that provides shorter-duration structured financing solutions to commercial real estate investors across Canada. This stock has dropped 19% so far in 2022. That has pushed the stock into negative territory in the year-over-year period.
In Q3 2022, Timbercreek reported net mortgage investments of $1.25 billion compared to $1.15 billion in the third quarter of fiscal 2021. Meanwhile, it posted adjusted net income and comprehensive income of $13.9 million — up marginally from $13.7 million in Q3 2021.
This stock closed at $7.68 per share on November 14. That means we can gobble up 1,750 shares of Timbercreek in our TFSA for a purchase price of $13,440. Timbercreek last paid out a monthly distribution of $0.058 per share, which represents a monster 8.9% yield. This investment will allow us to churn out monthly passive income of $101.50 in our TFSA in 2022 and beyond.
One more stock to snatch up in your TFSA today
TransAlta Renewables (TSX: RNW) is a Calgary-based company that develops, owns, and operates renewable power-generation facilities. Shares of this green energy stock have plunged 24% in the year-to-date period. The stock is down 25% from the same period in 2021.
Shares of TransAlta closed at $14.15 on November 14. In this scenario, we can purchase 935 shares of TransAlta for a total price of $13,230.25. This stock offers a monthly distribution of $0.078 per share, representing a very strong 6.6% yield. We can now look to generate monthly passive income of $72.93 in our TFSA.
Conclusion
This $40,000 investment in dividend stocks in our TFSA will allow us to generate monthly passive income of $248.03. That works out to annual passive income of $2,976.36.
