If you’re looking for ways to multiply your TFSA (Tax-Free Savings Account) savings and earn tax-free, reliable passive income at the same time, you should consider investing in Canadian dividend stocks. As many fundamentally strong companies in Canada continue to reward their investors with attractive dividends, even in difficult economic times, investing in them could prove to be a wise decision.
In this article, I’ll highlight the best Canadian monthly dividend stock you can add to your TFSA right now to expect outstanding returns on your investment in the long run.
One of the best monthly dividend stocks for your TFSA
Whether you’re investing for your retirement planning or just want to grow your TFSA wealth to be super rich, you may want to stick to long-term investing and not short-term trading. While it’s nearly impossible to predict short-term market moves, even new investors can make a fortune by sticking to the Foolish investing philosophy of taking the long-term approach.
In addition, you should try to pick stocks with a good fundamental outlook. Keeping these principles in mind, Northwest Healthcare Properties REIT (TSX:NWH.UN) could be a great stock to invest in now — especially if you want to earn tax-free, monthly passive income for decades.
It’s a Toronto-headquartered real estate Investment trust (REIT) with a market cap of $2.5 billion. NorthWest has a great portfolio of 233 income-producing healthcare properties globally with a gross leasable area of nearly 18.6 million square feet. Apart from hospitals, its properties are leased out to medical offices, specialty clinics, rehabilitation centres, and medical research institutes in several countries from the Americas, Europe, and Asia-Pacific.
It could help your TFSA wealth grow fast
Investing in REITs could be really beneficial for TFSA investors, as they tend to distribute a large portion of their annual income among shareholders as dividends. After delivering a solid 46% positive returns in the previous three years combined, NorthWest Healthcare Properties REIT has seen a sharp correction in 2022, as it currently trades with 24.3% year-to-date losses at $10.46 per share. At the current market price, it has a very impressive 7.6% annual dividend yield and distributes dividend payouts every month.
In five years between 2016 and 2021, NorthWest’s total revenue rose 35% from $277.3 million to $374.6 million. More importantly, its adjusted earnings during the same five-year period jumped by a solid 231% from $0.60 per share to $1.99 per share with the help of its consistently expanding healthcare asset base and increasing rental income.
As the world population continues to grow at a fast pace, I expect the demand for healthcare properties to continue soaring in the decades to come. These positive factors should help the financials of companies like NorthWest Healthcare Properties REIT grow at an exponential rate and their stocks rally.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| NorthWest Healthcare Properties REIT | $10.46 | 9,560 | $0.066670 | $637 | Monthly |
| Prices as of Nov. 24, 2022 |
Bottom line
Let’s say you invest $100,000 in NorthWest stock today. Your invested money could grow to $672,750 in 20 years in your TFSA, even if its stock delivers an average annual return of 10% by conservative estimates. In addition, your $100,000 investment could help you earn about $637 in monthly passive income, or about $7,648 a year.
While this example should give you a good idea of what to expect from long-term dividend investing, you must always try to minimize your risks by diversifying your TFSA portfolio by including more such stocks in it.
