TFSA Couples: How to Invest for $777 of Passive Income Each Month

The TFSA or Tax-Free Savings Account can be used to buy and hold a portfolio of blue chip dividend stocks trading on the TSX.

| More on:
TFSA and coins

Image source: Getty Images

The Tax-Free Savings Account (TFSA) can be used by equity investors to create an alternative stream of income. You can invest in blue-chip dividend stocks that provide shareholders with monthly or quarterly payouts. Since any returns generated in the TFSA, including dividends, are sheltered from taxes, your portfolio can deliver outsized gains over time.

Dividend-paying companies typically report consistent profits across market cycles. This visibility in cash flows and earnings makes them top bets for income-seeking investors.

In 2023, the maximum cumulative contribution room for the TFSA will increase to $88,000. For couples, the contribution limit will double to $176,000. So, let’s see how you can use the benefits of TFSA investing to build a dividend portfolio and receive $777 in tax-free passive income each month.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDTOTAL PAYOUTFREQUENCY
TD Bank$89.89392$0.96$376.32Quarterly
Enbridge$53.31660$0.8875$585.75Quarterly
TC Energy$57.99607$0.90$546.3Quarterly
Telus$28.131,251$0.35$488Quarterly
BIP$47.58740$0.4825$357Quarterly

Toronto-Dominion Bank

One of the largest banks in Canada, the Toronto-Dominion Bank (TSX:TD) offers investors a dividend yield of 4.3%. TD is the second-largest Canadian bank in terms of market cap, net income, and net assets. In North America, TD Bank is the sixth largest by total assets and fifth largest by total deposits.

Armed with a well-capitalized balance sheet, TD Bank is enviably positioned to tide over the threat of a global recession in 2023. Valued at 9.9 times forward earnings, TD Bank stock is very cheap at current valuations.

Enbridge

It’s impossible to avoid Enbridge (TSX:ENB) if you are building a dividend portfolio of blue chip stocks. With a yield of more than 6%, Enbridge has returned over 1,000% to investors in dividend-adjusted gains in the last two decades.

A majority of Enbridge’s cash flows are regulated, and the company is focused on expanding its base of assets, which should increase its earnings in the future and support dividend increases. Enbridge has increased dividends at an annual rate of 10% in the past decade.

TC Energy

Another Canada-based pipeline giant TC Energy (TSX:TRP) also provides shareholders with a tasty dividend yield of 6.2%. TC Energy has built a robust network of pipelines to transport a range of commodities across North America. Its contracts are fixed rate and indexed to inflation, making TC Energy almost immune to fluctuations in oil prices.

TC Energy is equipped with an investment-grade balance sheet and a sustainable payout ratio providing the company with enough room to lower debt, reinvest in capital expenditures, and increase dividend payouts.

Telus

One of the largest telecom companies in the country, Telus (TSX:T) is part of a defensive sector. Despite an inflationary environment, Telus is forecast to increase its adjusted earnings from $1.07 in 2021 to $1.44 in 2023.

Priced at 22.5 times forward earnings, Telus is expected to expand its profit margins at an annual rate of 18.4% in the next five years. It’s reasonably valued, given the stock’s impressive dividend yield of 4.9%.

Brookfield Infrastructure Partners

The final dividend stock on my list is Brookfield Infrastructure Partners (TSX:BIP.UN). This diversified company owns and operates utilities, transport, data center, and midstream businesses in the Americas, Europe, and Asia Pacific.

Down 16% from all-time highs, Brookfield Infrastructure Partners currently offers shareholders a dividend yield of 4.2%.

The Foolish takeaway

If TFSA couples distribute $176,000 equally among these five TSX stocks, they can earn around $9,328 in annual dividend income, translating into a monthly payout of $777.

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 Aditya Raghunath has positions in Enbridge. The Motley Fool recommends Brookfield Infrastructure Partners and Enbridge. The Motley Fool has a disclosure policy.

More on Dividend Stocks

young woman celebrating a victory while working with mobile phone in the office
Dividend Stocks

3 CRA Benefits Most Canadians Can Grab in 2024

You can save on taxes by claiming the dividend tax credit on Fortis Inc (TSX:FTS) shares.

Read more »

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

Engineers walk through a facility.
Dividend Stocks

1 TSX Stock I Wouldn’t Touch With a 10-Foot Pole

AtkinsRéalis (TSX:ATRL) is one TSX stock I'd never invest in.

Read more »

edit Woman in skates works on laptop
Dividend Stocks

3 No-Brainer Stocks to Buy Under $30

These three stocks all offer a huge deal for investors looking for dividends, as well as growth that will last.

Read more »

You Should Know This
Dividend Stocks

How to Convert a $300 Monthly Investment Into $338 in Monthly Income

If you want a certain amount in monthly passive income, invest a similar amount today and leave the rest to…

Read more »

Increasing yield
Dividend Stocks

3 Income Stocks With Big Yields to Consider in April 2024

If you haven’t yet made your March investments, here are three income stocks to buy the dip and lock in…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

RRSP Investors: Don’t Miss Out on This Contribution Hack!

This hack has so many benefits for you -- not just when you put it in your RRSP but for…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Passive Income: 2 Safe Dividend Stocks to Own for the Next 10 Years

Dividend stocks such as Manulife and Fortis can help you generate a stable and recurring passive-income stream.

Read more »