TFSA: Invest $10,000 and Make $57/Month in Passive Income

Canadian investors looking to churn out monthly passive income should target Keyera Corp. (TSX:KEY) and others in their TFSA right now.

| More on:
STACKED COINS DEPICTING MONEY GROWTH

Image source: Getty Images

The Tax-Free Savings Account (TFSA) typically garners attention among the investment community, because it offers the opportunity to post massive tax-free growth. Indeed, when the TFSA was in its infancy, the TFSA millionaire became something of an industry legend. These were investors who were able to turn the TFSA contribution limit, which was just $5,000 to start in 2009, into a seven-figure total. I love these triumphant tales as much as any investor, but today I want to explore how we can churn out passive income in this account on a monthly basis.

In this hypothetical, we are going to be starting out with a $10,000 investment in our TFSA. Money is tight for Canadians right now. This investment will allow us to generate solid monthly and annual income completely tax free. Let’s jump in!

This energy stock can provide monster passive income for your TFSA

Keyera (TSX:KEY) is a Calgary-based company that is engaged in the energy infrastructure business across Canada. Its shares have increased 1% in 2022 as of close on Thursday, December 22. The stock is up 2.8% year over year.

This energy stock closed at $28.97 on December 22. For our hypothetical, we can purchase 85 shares of Keyera for a total price of $2,462.45. Keyera currently offers a monthly dividend of $0.16 per share. That represents a 6.6% yield. This investment will allow us to churn out monthly passive income of $13.60.

Here’s another energy stock you can trust for the long haul

Freehold Royalties (TSX:FRU) is another energy stock I’d look to target to generate big passive income. This Calgary-based oil and gas royalty company owns working interests in oil, natural gas, natural gas liquids, and potash properties in western Canada and the United States.

Shares of Freehold closed at $15.43 on December 22. We can buy 165 shares of this energy stock for a purchase price of $2,545.95. Freehold offers a monthly distribution of $0.09 per share, which represents a tasty 7% yield. This investment means we can churn out tax-free passive income of $14.85.

TFSA investors seeking monster passive income should snatch up First National today

First National (TSX:FN) is a Toronto-based company that originates, underwrites, and services commercial and residential mortgages in Canada. The housing market has hit a rough patch due to an aggressive interest rate tightening policy from the Bank of Canada. However, the market will inevitably bounce back as it benefits from very high demand, low supply, and likely the softening of interest rates before the middle point of this decade.

This stock closed at $35.75 on December 22. TFSA investors can buy 70 shares of First National for a purchase price of $2,502.50. Moreover, this Canadian stock last paid out a monthly dividend of $0.20 per share, representing a very strong 6.7% yield. We can now gobble up monthly passive income of $14 going forward.

One more passive-income generator to add to your TFSA

Extendicare (TSX:EXE) is the fourth dividend stock I’d look to add to our hypothetical TFSA today. This Markham-based company provides care and services for seniors in Canada. Its shares have dropped 11% in the year-to-date period.

Shares of Extendicare closed at $6.57 on December 22. We can purchase 378 shares for a total price of $2,483.46. This stock offers a monthly dividend of $0.04 per share. That represents a monster 7.3% yield. We can now generate additional monthly passive income of $15.12 in our TFSA.

Bottom line

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDTOTAL PAYOUTFREQUENCY
KEY$28.9785$0.16$13.60Monthly
FRU$15.43165$0.09$14.85Monthly
FN$35.7570$0.20$14.00Monthly
EXE$6.57378$0.04$15.12Monthly

These investments will allow us to generate total monthly passive income of $57.57. That is a solid way to kick off the new year, and for a relatively small investment of $10,000. This works out to annual passive income of $690.84, which will be completely tax free.

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 and Keyera. The Motley Fool has a disclosure policy.

More on Investing

man touches brain to show a good idea
Tech Stocks

Nvidia Stock Becomes World’s Most Valuable Company: Buy Now or Beware?

Nvidia (NASDAQ:NVDA) stock is now the world's highest valued company, with a market cap of US$3.34 trillion. So, is the…

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

5 Canadian Stocks to Buy and Hold Forever in Your TFSA

Investing in stocks is not always about timing but about holding. Instead of looking at the price, look at the…

Read more »

Oil industry worker works in oilfield
Top TSX Stocks

Just Released: 5 Top Stocks to Buy in June 2024 [PREMIUM PICKS]

This month’s collection of our five favourite stocks leans hard on the energy sector.

Read more »

Dice engraved with the words buy and sell
Tech Stocks

Is Lightspeed Stock a Buy, Sell, or Hold?

Lightspeed (TSX:LSPD) stock was supposed to surge after Dax Dasilva's return, yet it's still stagnating. So, what should investors do…

Read more »

Gas pipelines
Energy Stocks

Buy, Sell, or Hold Enbridge Stock

Are you considering Enbridge (TSX:ENB)? Enbridge stock is a popular holding, but not all investors agree on whether you should…

Read more »

Arrowings ascending on a chalkboard
Dividend Stocks

The 5.5% Dividend Stock Set to Dominate the TSX

TD Bank (TSX:TD) stock looks severely undervalued while the yield is around 5.5%.

Read more »

protect, safe, trust
Dividend Stocks

Passive Income: How to Earn Safe Dividends With Just $10,000

These three dividend stocks with resilient business models and a growing earnings base can provide durable passive income.

Read more »

Digital background depicting innovative technologies in (AI) artificial systems, neural interfaces and internet machine learning technologies
Tech Stocks

1 of the Best Canadian AI Stocks (With Dividends) to Buy Now

OpenText is an AI stock that trades at a significant discount to consensus price target estimates in June 2024.

Read more »